Document and Entity Information
Document and Entity Information | 3 Months Ended |
Jun. 30, 2017shares | |
Document And Entity Information [Abstract] | |
Entity Registrant Name | MCKESSON CORP |
Entity Central Index Key | 927,653 |
Current Fiscal Year End Date | --03-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2017 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding (Cover) | 210,260,531 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 51,051 | $ 49,733 |
Cost of Sales | (48,491) | (46,826) |
Gross Profit | 2,560 | 2,907 |
Operating Expenses | (1,964) | (1,935) |
Operating Expenses | 1,927 | 1,935 |
Gain on Healthcare Technology Net Asset Exchange | 37 | 0 |
Operating Income | 633 | 972 |
Other Income, Net | 13 | 19 |
Loss from Equity Method Investment in Change Healthcare | (120) | 0 |
Interest Expense | (68) | (79) |
Income from Continuing Operations Before Income Taxes | 458 | 912 |
Income Tax Expense | (95) | (239) |
Income from Continuing Operations | 363 | 673 |
Income (Loss) from Discontinued Operations, Net of Tax | 2 | (113) |
Net Income | 365 | 560 |
Net Income Attributable to Noncontrolling Interests | (56) | (18) |
Net Income Attributable to McKesson Corporation | $ 309 | $ 542 |
Diluted | ||
Continuing operations (in dollars per share) | $ 1.44 | $ 2.88 |
Discontinued operations (in dollars per share) | 0.01 | (0.50) |
Total (in dollars per share) | 1.45 | 2.38 |
Basic | ||
Continuing operations (in dollars per share) | 1.46 | 2.91 |
Discontinued operations (in dollars per share) | 0 | (0.50) |
Total (in dollars per share) | 1.46 | 2.41 |
Dividends declared per common share (in dollars per share) | $ 0.28 | $ 0.28 |
Weighted Average Common Shares | ||
Diluted (in shares) | 213 | 228 |
Basic (in shares) | 211 | 225 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net Income | $ 365 | $ 560 |
Other Comprehensive Income (Loss), Net of Tax | ||
Foreign currency translation adjustments arising during the period | 382 | (255) |
Unrealized losses on net investment hedges arising during the period | (70) | 0 |
Unrealized gains on cash flow hedges arising during the period | 14 | 0 |
Retirement-related benefit plans | (5) | 11 |
Other Comprehensive Income (Loss), Net of Tax | 321 | (244) |
Comprehensive Income (Loss) | 686 | 316 |
Comprehensive Loss (Income) Attributable to Noncontrolling Interests | (172) | 48 |
Comprehensive Income (Loss) Attributable to McKesson Corporation | $ 514 | $ 364 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2017 | Mar. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 2,339 | $ 2,783 |
Receivables, net | 19,132 | 18,215 |
Inventories, net | 15,498 | 15,278 |
Prepaid expenses and other | 728 | 672 |
Total Current Assets | 37,697 | 36,948 |
Property, Plant and Equipment, Net | 2,349 | 2,292 |
Goodwill | 11,750 | 10,586 |
Intangible Assets, Net | 4,238 | 3,665 |
Equity Method Investment in Change Healthcare | 3,855 | 4,063 |
Other Noncurrent Assets | 1,927 | 3,415 |
Total Assets | 61,816 | 60,969 |
Current Liabilities | ||
Drafts and accounts payable | 32,015 | 31,022 |
Short-term borrowings | 3 | 183 |
Deferred revenue | 279 | 346 |
Current portion of long-term debt | 525 | 1,057 |
Other accrued liabilities | 2,977 | 3,004 |
Total Current Liabilities | 35,799 | 35,612 |
Long-Term Debt | 7,424 | 7,305 |
Long-Term Deferred Tax Liabilities | 3,752 | 3,678 |
Other Noncurrent Liabilities | 1,938 | 1,774 |
Redeemable Noncontrolling Interests | 1,390 | 1,327 |
McKesson Corporation Stockholders’ Equity | ||
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 at June 30, 2017 and March 31, 2017, 274 and 273 shares issued at June 30, 2017 and March 31, 2017 | 3 | 3 |
Additional Paid-in Capital | 6,080 | 6,028 |
Retained Earnings | 13,442 | 13,189 |
Accumulated Other Comprehensive Loss | (1,936) | (2,141) |
Other | (4) | (2) |
Treasury Shares, at Cost, 64 and 62 at June 30, 2017 and March 31, 2017 | (6,282) | (5,982) |
Total McKesson Corporation Stockholders’ Equity | 11,303 | 11,095 |
Noncontrolling Interests | 210 | 178 |
Total Equity | 11,513 | 11,273 |
Total Liabilities, Redeemable Noncontrolling Interests and Equity | $ 61,816 | $ 60,969 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Jun. 30, 2017 | Mar. 31, 2017 |
McKesson Corporation Stockholders’ Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 274,000,000 | 273,000,000 |
Treasury stock, shares (in shares) | 64,000,000 | 62,000,000 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating Activities | ||
Net income | $ 365 | $ 560 |
Adjustments to reconcile to net cash provided by operating activities: | ||
Depreciation and amortization | 227 | 242 |
Loss from equity method investment in Change Healthcare | 120 | 0 |
Deferred taxes | 85 | 31 |
Charges associated with last-in-first-out inventory method | 26 | 47 |
Loss (gain) from sale of businesses | (1) | 113 |
Other non-cash items | 8 | 29 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Receivables | (363) | (300) |
Inventories | (59) | (121) |
Drafts and accounts payable | 463 | 1,549 |
Deferred revenue | (73) | (113) |
Taxes | (18) | 95 |
Other | (39) | (273) |
Net cash provided by operating activities | 741 | 1,859 |
Investing Activities | ||
Payments for property, plant and equipment | (75) | (76) |
Capitalized software expenditures | (43) | (38) |
Acquisitions, net of cash and cash equivalents acquired | (1,485) | (1,819) |
Proceeds from/(payments for) sale of businesses, net | 3 | |
Proceeds from/(payments for) sale of businesses, net | (101) | |
Restricted cash for acquisitions | 1,469 | 935 |
Other | 2 | (55) |
Net cash used in investing activities | (129) | (1,154) |
Financing Activities | ||
Proceeds from short-term borrowings | 2,282 | 7 |
Repayments of short-term borrowings | (2,463) | (14) |
Repayments of long-term debt | (541) | (1) |
Common stock transactions: | ||
Issuances | 27 | 36 |
Share repurchases, including shares surrendered for tax withholding | (300) | (58) |
Dividends paid | (62) | (66) |
Other | (74) | 14 |
Net cash used in financing activities | (1,131) | (82) |
Effect of exchange rate changes on cash and cash equivalents | 75 | (12) |
Net increase (decrease) in cash and cash equivalents | (444) | 611 |
Cash and cash equivalents at beginning of period | 2,783 | 4,048 |
Cash and cash equivalents at end of period | $ 2,339 | $ 4,659 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation: The condensed consolidated financial statements of McKesson Corporation (“McKesson,” the “Company,” or “we” and other similar pronouns) include the financial statements of all wholly-owned subsidiaries and majority‑owned or controlled companies. For those consolidated subsidiaries where our 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” on 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. We consider ourselves to control an entity if we are the majority owner of and have voting control over such entity. We also assess control through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business entity is the primary beneficiary of the VIE. We consolidate VIEs when it is determined that we are the primary beneficiary of the VIE. Investments in business entities in which we do not have control, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. Refer to Financial Note 2, “Healthcare Technology Net Asset Exchange” for further information on our equity method investment in Change Healthcare, LLC. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and disclosures normally included in the annual consolidated financial statements. To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these financial statements and income and expenses during the reporting period. Actual amounts may differ from these estimated amounts. In our opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. The results of operations for the quarter ended June 30, 2017 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 our Annual Report on Form 10-K for the fiscal year ended March 31, 2017 previously filed with the SEC on May 22, 2017 (“2017 Annual Report”). The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year. Recently Adopted Accounting Pronouncements Investments: In the first quarter of 2018, we adopted amended guidance for the equity method of accounting. The amended guidance simplifies the transition to the equity method of accounting. This standard eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Additionally, at the point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income (loss) will be recognized through earnings. The adoption of this amended guidance did not have a material effect on our condensed consolidated financial statements. Derivatives and Hedging: In the first quarter of 2018, we adopted amended guidance for derivative instrument novations. The amendments clarify that a novation, a change in the counterparty, to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided all other hedge accounting criteria continue to be met. The adoption of this amended guidance did not have an effect on our condensed consolidated financial statements. Consolidation: In the first quarter of 2018, we adopted amended guidance for VIEs. The amended guidance requires a single decision maker of a VIE to consider indirect economic interests in the entity held through related parties that are under common control on a proportionate basis when determining whether it is the primary beneficiary of that VIE. This amendment does not change the existing characteristics of a primary beneficiary. The adoption of this amended guidance did not have a material effect on our condensed consolidated financial statements. Inventory: In the first quarter of 2018, we adopted amended guidance for the subsequent measurement of inventory. The amended guidance requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The requirement would replace the current lower of cost or market evaluation. Accounting guidance is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail method. The adoption of this amended guidance did not have a material effect on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted Share-Based Payments: In May 2017, amended guidance was issued for employee share-based payment awards. This amendment provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the amended guidance, we are required to account for the effects of a modification if the fair value, the vesting conditions or the classification (as an equity instrument or a liability instrument) of the modified award change from that of the original award immediately before the modification. The amended guidance is effective for us on a prospective basis commencing in the first quarter of 2019. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Premium Amortization of Purchased Callable Debt Securities: In March 2017, amended guidance was issued to shorten the amortization period for certain callable debt securities held at a premium. The amended guidance requires the premium of callable debt securities to be amortized to the earliest call date but does not require an accounting change for securities held at a discount as they would still be amortized to maturity. The amended guidance is effective for us on a modified retrospective basis commencing in the first quarter of 2020. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Compensation - Retirement Benefits: In March 2017, amended guidance was issued which requires us to report the service cost component of defined benefit pension plans and other postretirement plans in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net benefit cost are required to be presented in the statements of operations separately from the service cost component. This amended guidance is effective for us in the first quarter of 2019 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Derecognition of Nonfinancial Assets: In February 2017, amended guidance was issued that defines the term “in substance nonfinancial asset” as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the asset that is promised is concentrated in nonfinancial assets. The scope of this amendment includes nonfinancial assets transferred within a legal entity including a parent entity’s transfer of nonfinancial assets by transferring ownership interests in consolidated subsidiaries. The amendment excludes all businesses and nonprofit activities from its scope and therefore all entities, with limited exceptions, are required to account for the derecognition of a business or nonprofit activity in accordance with the consolidation guidance once this amended guidance becomes effective. We are required to apply this amended guidance at the same time we apply the amended revenue guidance in the first quarter of 2019. It allows for either full retrospective adoption or modified retrospective adoption. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Goodwill Impairment Testing: In January 2017, amended guidance was issued to simplify goodwill impairment testing by eliminating the second step of the impairment test. Under the second step, the implied fair value of goodwill is calculated in a hypothetical analysis by subtracting the fair value of all assets and liabilities of the reporting unit, including any unrecognized intangible assets, from the fair value of the reporting unit calculated in the first step of the impairment test. If the carrying value of goodwill for the reporting unit exceeds the implied fair value of goodwill, an impairment charge is recorded for that excess. The amended guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. The amended guidance is effective for us on a prospective basis commencing in the first quarter of 2021. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Business Combinations: In January 2017, amended guidance was issued to clarify the definition of a business to assist entities in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amended guidance provides a practical screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amended guidance requires that to be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create output. The amended guidance is effective for us commencing in the first quarter of 2019 on a prospective basis. Early adoption is permitted in certain circumstances. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Restricted Cash: In November 2016, amended guidance was issued that requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Transfers between cash and cash equivalents and restricted cash or restricted cash equivalents are not reported as cash flow activities in the statement of cash flows. The amended guidance is effective for us commencing in the first quarter of 2019 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory: In October 2016, amended guidance was issued to require entities to recognize income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amended guidance is effective for us commencing in the first quarter of 2019 on a modified retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments: In August 2016, amended guidance was issued to provide clarification on cash flow classification related to eight specific issues including contingent consideration payments made after a business combination and distributions received from equity method investees. The amended guidance is effective for us commencing in the first quarter of 2019 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Financial Instruments - Credit Losses: In June 2016, amended guidance was issued, which will change the impairment model for most financial assets and require additional disclosures. The amended guidance requires financial assets that are measured at amortized cost, be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of financial assets. The amended guidance also requires us to consider historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount in estimating credit losses. The amended guidance becomes effective for us commencing in the first quarter of 2021 and will be applied through a cumulative-effect adjustment to the beginning retained earnings in the year of adoption. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Leases: In February 2016, amended guidance was issued for lease arrangements. The amended standard will require lessees to recognize assets and liabilities on the balance sheet for all leases with terms longer than 12 months and provide enhanced disclosures on key information of leasing arrangements. The amended guidance is effective for us commencing in the first quarter of 2020, on a modified retrospective basis. Early adoption is permitted. We plan to adopt the new standard on the effective date and are currently evaluating the impact of this amended guidance on our consolidated financial statements. We anticipate that the adoption of the amended lease guidance will materially affect our condensed consolidated balance sheet and will require certain changes to our systems and processes. Financial Instruments: In January 2016, amended guidance was issued that requires equity investments to be measured at fair value with changes in fair value recognized in net income and enhanced disclosures about those investments. This guidance also simplifies the impairment assessments of equity investments without readily determinable fair value. The investments that are accounted for under the equity method of accounting or result in consolidation of the investee are excluded from the scope of this amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2019 and will be adopted through a cumulative-effect adjustment. Early adoption is not permitted except for certain provisions. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Revenue Recognition: In May 2014, amended guidance was issued for recognizing revenue from contracts with customers. The amended guidance eliminates industry specific guidance and applies to all companies. Revenues will be recognized when an entity satisfies a performance obligation by transferring control of a promised good or service to a customer in an amount that reflects the consideration to which the entity expects to be entitled for that good or service. Revenue from a contract that contains multiple performance obligations is allocated to each performance obligation generally on a relative standalone selling price basis. The amended guidance also requires additional quantitative and qualitative disclosures. In March, April and May 2016, amended guidance was further issued including clarifying guidance on principal versus agent considerations, ability to choose an accounting policy election to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good, and provided certain scope improvements and practical expedients. The amended standard is effective for us commencing in the first quarter of 2019 and allows for either full retrospective adoption or modified retrospective adoption. Early adoption is permitted. While we continue to evaluate the effect of the amended standard, we have conducted a preliminary assessment for our Distribution Solutions segment and do not expect adoption of the amended standard to have a material impact on our consolidated financial statements. The majority of our Distribution Solutions segment’s revenue is generated from sales of pharmaceutical products, which will continue to be recognized when control of the goods is transferred to the customer. We generally anticipate having substantially similar performance obligations under the amended guidance as compared with deliverables and units of account currently being recognized. We intend to make policy elections within the amended standard that are consistent with our current accounting. Our preliminary assessment does not include certain businesses for which we are exploring strategic alternatives and we continue to evaluate the potential impact of the recent acquisitions. This preliminary assessment is subject to change prior to adoption. Additionally, we anticipate adopting this amended standard on a modified retrospective basis in our first quarter of 2019. |
Healthcare Technology Net Asset
Healthcare Technology Net Asset Exchange | 3 Months Ended |
Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Healthcare Technology Net Asset Exchange | Healthcare Technology Net Asset Exchange On June 28, 2016, we entered into a contribution agreement (“Contribution Agreement”) with Change Healthcare Holdings, Inc. (“Change”), a Delaware corporation, and others including shareholders of Change to form a joint venture, Change Healthcare, LLC (“Change Healthcare”), a Delaware limited liability company. On March 1, 2017, the transaction closed upon satisfaction of all closing conditions pursuant to the Contribution Agreement. Under the terms of the Contribution Agreement, we contributed the majority of our McKesson Technology Solutions businesses (“Core MTS Business”) to the newly formed joint venture, Change Healthcare. We retained our RelayHealth Pharmacy (“RHP”) and Enterprise Information Solutions (“EIS”) businesses. Change contributed substantially all of its businesses to the joint venture excluding its pharmacy switch and prescription routing business. In exchange for the contribution, we own 70% of the joint venture with the remaining equity ownership held by Change shareholders. The joint venture is jointly governed by us and Change shareholders. Change Healthcare is a healthcare technology company which provides software and analytics, network solutions and technology-enabled services that will deliver wide-ranging financial, operational and clinical benefits to payers, providers and consumers. McKesson and Change shareholders have agreed to take steps to launch an initial public offering of an entity which holds equity in Change Healthcare, subject to market conditions. Sometime thereafter, we expect to exit our investment in Change Healthcare through a distribution to McKesson shareholders. Gain from Healthcare Technology Net Asset Exchange We accounted for this transaction as a sale of the Core MTS Business and a subsequent purchase of a 70% interest in the newly formed joint venture. Accordingly, in the fourth quarter of 2017, we deconsolidated the Core MTS Business and recorded a pre-tax gain of $3,947 million (after-tax gain of $3,018 million ) within operating expenses in our consolidated statements of operations. This transaction did not meet the criteria to be reported as a discontinued operation since it did not constitute a significant strategic business shift for the Company. During the first quarter of 2018, we recorded a pre-tax gain of approximately $37 million (after-tax gain of $22 million ) under the caption, “Gain on Healthcare Technology Net Asset Exchange,” upon the finalization of net working capital and other adjustments. At June 30, 2017, we had a receivable of $126 million from Change Healthcare representing the final settlement of the net working capital and other adjustments. Equity Method Investment in Change Healthcare Our investment in the joint venture is accounted for using the equity method of accounting. We disclose intervening events at the joint venture in the lag period that could materially affect our consolidated financial statements, if applicable. There were no material intervening events at the joint venture during June 2017. During the first quarter of 2018, we recorded our proportionate share of loss from Change Healthcare of $120 million , which included transaction and integration expenses incurred by the joint venture and amortization expenses associated with equity method intangible assets. This amount was recorded under the caption, “Loss from Equity Method Investment in Change Healthcare,” in our condensed consolidated statement of operations. At June 30, 2017, the carrying value of our investment was $3,855 million , which exceeded our proportionate share of the joint venture’s book value of net assets by approximately $4,768 million , primarily reflecting equity method intangible assets and goodwill and other fair value adjustments. Summarized financial information (unaudited) of Change Healthcare is as follows: (In millions) Quarter Ended June 30, 2017 Revenues $ 865 Loss from Continuing Operations (84 ) Net Loss (84 ) Our proportionate share of Change Healthcare ’ s net loss as reported was $59 million ( $84 million at our 70% ownership). Adjustments from their carrying value to our initial fair value basis of accounting resulted in a total reported net loss of $120 million for McKesson. The amortization of fair value adjustments included incremental intangible amortization and removal of profit associated with the recognition of deferred revenue, as well as basis differences in long-term debt. Agreements with Change Healthcare and Related Party Transactions At the closing of the transaction, McKesson, Change Healthcare and certain Change shareholders also entered into various ancillary agreements, including transition services agreements (“TSA”), a transaction and advisory fee agreement (“Advisory Agreement”), a tax receivable agreement (“TRA”) and certain other commercial agreements. Pursuant to the TRA, McKesson may be required to make certain payments or may be entitled to receive certain payments related to the cash tax savings attributable to the utilization of certain tax attributes, including certain amortizable tax basis in software contributed by McKesson to Change Healthcare. At June 30, 2017 and March 31, 2017, we had a $136 million noncurrent liability payable to Change Healthcare shareholders associated with the TRA. The amount is based on certain estimates and could become payable in periods after a disposition of our investment in Change Healthcare. No such payments were required to be made or received during the first quarter of 2018. Pursuant to the TSA, McKesson provides various transitional services to the joint venture to support certain operations including information technology, accounting and other administrative services. The total fees charged by us for such transition services were $37 million for the first quarter of 2018. Transition services fees are included within operating expenses in our condensed consolidated statements of operations. Pursuant to the Advisory Agreement, the joint venture pays McKesson and Change shareholders an agreed upon amount for each fiscal year on a quarterly basis. The foregoing advisory and transaction fees are non-refundable and allocated to McKesson and Change shareholders based on their respective equity ownership percentages. In the first quarter of 2018, we did not earn material advisory fees and transaction fees. Revenues recorded and expenses incurred under commercial arrangements with Change Healthcare were not material during the first quarter of 2018. At June 30, 2017 and March 31, 2017, receivables from and payables to the joint venture were not material. |
Business Combinations
Business Combinations | 3 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations CoverMyMeds LLC (“CMM”) On April 3, 2017, we completed our acquisition of CMM, a privately-owned company headquartered in Columbus, Ohio. CMM provides electronic prior authorization solutions to pharmacies, providers, payers, and pharmaceutical manufacturers. The net purchase consideration of $1.3 billion was funded from cash on hand. The cash consideration was initially paid into an escrow account prior to our 2017 fiscal year end, and was included in “Other Noncurrent Assets” within our consolidated balance sheet at March 31, 2017. Pursuant to the agreement, McKesson may pay up to an additional $0.2 billion of contingent consideration based on CMM’s financial performance for 2018 and 2019. We recorded a liability for this remaining contingent consideration at its estimated fair value of $113 million as of the acquisition date on our condensed consolidated balance sheet. The contingent consideration was estimated using a Monte Carlo simulation, which utilizes Level 3 inputs under the fair value measurement and disclosure guidance, including estimated financial forecasts. The contingent liability is re-measured at fair value at each reporting date until the liability is extinguished with changes in fair value being recorded to our statements of operations. There was no material change in the contingent liability’s fair value during the first quarter of 2018. The initial fair value of this contingent consideration is a non-cash investing activity. The financial results of CMM are included in our North America pharmaceutical distribution and services business within our Distribution Solutions segment since the acquisition date. The provisional fair value of assets acquired and liabilities assumed as of the acquisition date, excluding goodwill and intangibles, were $54 million and $8 million . Approximately $854 million of the preliminary purchase price allocation has been assigned to goodwill, which reflects the expected future benefits of certain synergies and intangible assets that do not qualify for separate recognition. The amount of goodwill is fully deductible for tax purposes. Included in the preliminary purchase price allocation are acquired identifiable intangibles of $502 million primarily representing customer relationships with a weighted average life of 17 years. Amounts recognized as of the acquisition date are provisional and subject to change within the measurement period as our fair value assessments are finalized. Rexall Health On December 28, 2016, we completed our acquisition of Rexall Health which operates approximately 470 retail pharmacies in Canada, particularly in Ontario and Western Canada. The net cash purchase consideration of $2.9 billion Canadian dollars (or, approximately $2.1 billion ) was funded from cash on hand. As part of the transaction, McKesson agreed to divest 27 local stores that the Competition Bureau of Canada (the “Bureau”) identified during its review of the transaction. We expect to complete the sale of these local market divestitures during the first half of 2018. The financial results of Rexall Health are included in our North America pharmaceutical distribution and services business within our Distribution Solutions segment since the acquisition date. During the first quarter of 2018, we recorded certain measurement period adjustments to the provisional fair value of assets acquired and liabilities assumed as of the acquisition date (primarily an increase of $17 million to intangibles). The amounts as of the acquisition date are provisional and subject to change within the measurement period as our fair value assessments are finalized. Total adjusted provisional fair value of assets acquired and liabilities assumed as of the acquisition date, excluding goodwill and intangibles, were $674 million and $212 million . Approximately $950 million of the adjusted preliminary purchase price allocation has been assigned to goodwill, which primarily reflects the expected future benefits of certain synergies and intangible assets that do not qualify for separate recognition. Included in the adjusted preliminary purchase price allocation are acquired identifiable intangibles of $872 million , net of intangibles classified as held for sale, primarily representing trade names with a weighted average life of 19 years and customer relationships with a weighted average life of 19 years. At June 30, 2017, assets of those stores to be divested were approximately $193 million and were included under the captions, “Prepaid expenses and other” in the accompanying condensed consolidated balance sheet. There were no material liabilities associated with those stores at June 30, 2017. The fair value of acquired intangibles from these acquisitions was primarily determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 inputs. 2017 Acquisitions In the first quarter of 2017, we completed our acquisitions of Vantage Oncology Holdings, LLC (“Vantage”), Biologics, Inc., UDG Healthcare Plc (“UDG”) and other businesses for net cash payments of $1.8 billion . Other Acquisitions During the last two years, we also completed other acquisitions within both of our operating segments. Financial results for our business acquisitions have been included in our consolidated financial statements since their respective acquisition dates. Purchase prices for our business acquisitions have been allocated based on estimated fair values at the date of acquisition. Goodwill recognized for our business acquisitions is generally not expected to be deductible for tax purposes. However, if we acquire the assets of a company, the goodwill may be deductible for tax purposes. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations In the fourth quarter of 2016, we entered into an agreement to sell our Brazilian pharmaceutical distribution business to a third party from our Distribution Solutions segment. In the first quarter of 2017, we completed the sale of this business and recognized an after-tax loss of $113 million within discontinued operations primarily for the settlement of certain indemnification matters as well as the release of the cumulative translation losses. We made a payment of approximately $100 million related to the sale of this business in the first quarter of 2017. The results of this business have been classified as discontinued operations since 2015. The results of discontinued operations for the first quarters of 2018 and 2017 were not material except for the loss recognized upon the disposition of our Brazilian business in 2017. As of June 30, 2017 and March 31, 2017, the carrying amounts of total assets and liabilities of discontinued operations were not material. |
Restructuring
Restructuring | 3 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring In the fourth quarter of 2016, we committed to a restructuring plan to lower our operating costs (the “Cost Alignment Plan”). The Cost Alignment Plan primarily consists of a reduction in workforce, and business process initiatives that will be substantially implemented prior to the end of 2019. Business process initiatives primarily include plans to reduce operating costs of our distribution and pharmacy operations, administrative support functions, and technology platforms, as well as the disposal and abandonment of certain non-core businesses. As a result of the Cost Alignment Plan, we expect to record total pre-tax charges of approximately $250 million to $270 million , of which $246 million of pre-tax charges were recorded to date. Estimated remaining charges primarily consist of exit-related costs and accelerated depreciation and amortization, which are largely attributed to our Distribution Solutions segment. During the first quarter of 2017, we recorded a pre-tax charge of $9 million as part of the Cost Alignment Plan. There were no material restructuring charges recorded during the first quarter of 2018. During the first quarters of 2018 and 2017, we made $14 million and $45 million of cash payments, primarily related to severance. The reserve balances as of June 30, 2017 and March 31, 2017 include $64 million and $71 million recorded in other accrued liabilities, and $35 million recorded in other noncurrent liabilities in our condensed consolidated balance sheet. |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the first quarters of 2018 and 2017, income tax expense related to continuing operations was $95 million and $239 million and included net discrete tax expense of $3 million and net discrete tax benefit of $35 million . Our discrete tax benefits for the first quarter of 2017 included $37 million related to the adoption of the amended accounting guidance on employee share-based compensation. Our reported income tax rates for the first quarters of 2018 and 2017 were 20.7% and 26.2% . Fluctuations in our reported income tax rates are primarily due to changes within our business mix, including varying proportions of income attributable to foreign countries that have lower income tax rates, discrete items and the impact of the intercompany sale of software. As of June 30, 2017 , we had $516 million of unrecognized tax benefits, of which $371 million would reduce income tax expense and the effective tax rate, if recognized. During the next twelve months, it is reasonably possible that audit resolutions could potentially reduce our unrecognized tax benefits by up to $60 million . However, this amount may change as we continue to have ongoing negotiations with various taxing authorities throughout the year. We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. During the first quarter of 2017, we reached an agreement with the Internal Revenue Service (“IRS”) to settle all outstanding issues relating to the fiscal years 2007 through 2009. This settlement did not have a material impact on our provision for income taxes. We are subject to audit by the IRS for fiscal years 2010 through the current fiscal year. We are generally subject to audit by taxing authorities in various U.S. states and in foreign jurisdictions for fiscal years 2006 through the current fiscal year. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interests and Noncontrolling Interests | 3 Months Ended |
Jun. 30, 2017 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interests and Noncontrolling Interests | Redeemable Noncontrolling Interests and Noncontrolling Interests Redeemable Noncontrolling Interests Our redeemable noncontrolling interests relate to our consolidated subsidiary, Celesio AG (“Celesio”). The domination and profit and loss transfer agreement (the “Domination Agreement”) was entered into between McKesson and Celesio in connection with our 2014 acquisition of Celesio and became effective in December 2014. Under the Domination Agreement, the noncontrolling shareholders of Celesio have a right to put (“Put Right”) their Celesio shares at €22.99 per share increased annually for interest in the amount of 5 percentage points above a base rate published by the German Bundesbank semiannually, less any compensation amount or guaranteed dividend already paid by McKesson in respect of the relevant time period (“Put Amount”). The exercise of the Put Right will reduce the balance of redeemable noncontrolling interests. During the first quarter of 2018, we paid $50 million to purchase 1.9 million shares of Celesio through the exercises of the Put Right by the noncontrolling shareholders, which decreased the carrying value of redeemable noncontrolling interests by $53 million . The balance of redeemable noncontrolling interests is reported at the greater of its carrying value or its maximum redemption value at each reporting date. The redemption value is the Put Amount adjusted for exchange rate fluctuations each period. At June 30, 2017 and March 31, 2017, the carrying value of redeemable noncontrolling interests of $1.39 billion and $1.33 billion exceeded the maximum redemption value of $1.24 billion and $1.21 billion . At June 30, 2017 and March 31, 2017, we owned approximately 77% and 76% of Celesio’s outstanding common shares. Under the Domination Agreement, the noncontrolling shareholders of Celesio received a one-time guaranteed dividend of €0.83 per Celesio share for the 2014 calendar year and are also entitled to receive an annual recurring compensation amount of €0.83 per Celesio share since January 2015. As a result, during the first quarters of 2018 and 2017, we recorded a total attribution of net income to the noncontrolling shareholders of Celesio of $9 million and $11 million . All amounts were recorded in our condensed consolidated statement of operations within the caption, “Net Income Attributable to Noncontrolling Interests,” and the corresponding liability balance was recorded within other accrued liabilities on our condensed consolidated balance sheet. During fiscal 2014, subsequent to the effectiveness of the Domination Agreement, certain noncontrolling shareholders of Celesio initiated appraisal proceedings (“Appraisal Proceedings”) with the Stuttgart Regional Court to challenge the adequacy of the compensation amount, the guaranteed dividend and/or the Put Amount. As long as any Appraisal Proceedings are pending, the compensation amount, guaranteed dividend and/or Put Amount will be paid as specified currently in the Domination Agreement. Noncontrolling Interests Our noncontrolling interests represent third-party equity interests in our consolidated entities, primarily Vantage and ClarusONE Sourcing Services LLP, were $210 million and $178 million at June 30, 2017 and March 31, 2017. During the first quarters of 2018 and 2017, we allocated a total of $47 million and $7 million of net income to noncontrolling interests. Changes in redeemable noncontrolling interests and noncontrolling interests for the first quarter of 2018 were as follows: (In millions) Noncontrolling Interests Redeemable Noncontrolling Interests Balance, March 31, 2017 $ 178 $ 1,327 Net income attributable to noncontrolling interests 47 9 Other comprehensive income — 116 Reclassification of recurring compensation to other accrued liabilities — (9 ) Payments to noncontrolling interests (18 ) — Exercises of Put Right — (53 ) Other 3 — Balance, June 30, 2017 $ 210 $ 1,390 Changes in redeemable noncontrolling interests and noncontrolling interests for the first quarter of 2017 were as follows: (In millions) Noncontrolling Interests Redeemable Noncontrolling Interests Balance, March 31, 2016 $ 84 $ 1,406 Net income attributable to noncontrolling interests 7 11 Other comprehensive loss — (66 ) Reclassification of recurring compensation to other accrued liabilities — (11 ) Purchase of noncontrolling interests 152 — Other (1 ) — Balance, June 30, 2016 $ 242 $ 1,340 The effect of changes in our ownership interests with noncontrolling interests on our equity of $3 million was recorded as a net increase to McKesson’s stockholders’ paid-in capital during the first quarter of 2018. Net income attributable to McKesson and transfers from noncontrolling interests amounted to $312 million during the first quarter of 2018. |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share are computed similar to basic earnings per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. The computations for basic and diluted earnings per common share are as follows: Quarter Ended June 30, (In millions, except per share amounts) 2017 2016 Income from continuing operations $ 363 $ 673 Net income attributable to noncontrolling interests (56 ) (18 ) Income from continuing operations attributable to McKesson 307 655 Income (loss) from discontinued operations, net of tax 2 (113 ) Net income attributable to McKesson $ 309 $ 542 Weighted average common shares outstanding: Basic 211 225 Effect of dilutive securities: Options to purchase common stock 1 1 Restricted stock units 1 2 Diluted 213 228 Earnings (loss) per common share attributable to McKesson: (1) Diluted Continuing operations $ 1.44 $ 2.88 Discontinued operations 0.01 (0.50 ) Total $ 1.45 $ 2.38 Basic Continuing operations $ 1.46 $ 2.91 Discontinued operations — (0.50 ) Total $ 1.46 $ 2.41 (1) Certain computations may reflect rounding adjustments. Potentially dilutive securities include outstanding stock options, restricted stock units, and performance-based and other restricted stock units. Approximately 2 million potentially dilutive securities were excluded from the computations of diluted net earnings per common share for each of the quarters ended June 30, 2017 and 2016 , as they were anti-dilutive. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 3 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Changes in the carrying amount of goodwill were as follows: (In millions) Distribution Solutions Technology Solutions Total Balance, March 31, 2017 $ 10,132 $ 454 $ 10,586 Goodwill acquired 940 — 940 Acquisition accounting, transfers and other adjustments (1) 324 (330 ) (6 ) Foreign currency translation adjustments, net 230 — 230 Balance, June 30, 2017 $ 11,626 $ 124 $ 11,750 (1) Effective April 1, 2017, our RHP business was transitioned from the Technology Solutions segment to the Distribution Solutions segment. As of June 30, 2017 and March 31, 2017 , accumulated goodwill impairment losses were $290 million primarily in our Technology Solutions segment. Information regarding intangible assets is as follows: June 30, 2017 March 31, 2017 (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 $ 3,411 $ (1,392 ) $ 2,019 $ 2,893 $ (1,295 ) $ 1,598 Service agreements 13 1,023 (332 ) 691 1,009 (316 ) 693 Pharmacy licenses 25 772 (164 ) 608 741 (150 ) 591 Trademarks and trade names 15 870 (136 ) 734 845 (124 ) 721 Technology 5 151 (71 ) 80 69 (64 ) 5 Other 5 261 (155 ) 106 201 (144 ) 57 Total $ 6,488 $ (2,250 ) $ 4,238 $ 5,758 $ (2,093 ) $ 3,665 Amortization expense of intangible assets was $121 million and $115 million for the quarters ended June 30, 2017 and 2016. Estimated annual amortization expense of these assets is as follows: $328 million , $420 million , $405 million , $393 million and $361 million for the remainder of 2018 and each of the succeeding years through 2022 and $2,331 million thereafter. All intangible assets were subject to amortization as of June 30, 2017 and March 31, 2017 . |
Debt and Financing Activities
Debt and Financing Activities | 3 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt and Financing Activities | Debt and Financing Activities Long-Term Debt Our long-term debt includes both U.S. dollar and foreign currency (primarily Euro and British pound sterling) denominated borrowings. At June 30, 2017 and March 31, 2017, $7,949 million and $8,362 million of total long-term debt were outstanding, of which $525 million and $1,057 million were included under the caption “Current portion of long-term debt” within the condensed consolidated balance sheets. During the first quarter of 2018, we repaid our €500 million bond that matured on April 26, 2017. Revolving Credit Facilities We have a syndicated $3.5 billion five -year senior unsecured revolving credit facility (the “Global Facility”), which has a $3.15 billion aggregate sublimit of availability in Canadian dollars, British pound sterling and Euros. Borrowings under the Global Facility bear interest based upon the London Interbank Offered Rate, Canadian Dealer Offered Rate for credit extensions denominated in Canadian Dollars, a prime rate, or alternative overnight rates as applicable, plus agreed margins. The Global Facility contains a financial covenant which obligates the Company to maintain a debt to capital ratio of no greater than 65% and other customary investment grade covenants. If we do not comply with these covenants, our ability to use the Global Facility may be suspended and repayment of any outstanding balances under the Global Facility may be required. At June 30, 2017, we were in compliance with all covenants. There were no borrowings outstanding under this facility during the first quarter of 2018, and as of June 30, 2017. We also maintain bilateral credit lines primarily denominated in Euros with a total committed and uncommitted balance of $244 million . Borrowings and repayments were not material during the first quarters of 2018 and 2017. As of June 30, 2017 and March 31, 2017, amounts outstanding under these credit lines were not material. Commercial Paper We maintain a commercial paper program to support our working capital requirements and for other general corporate purposes. Under the program, the Company can issue up to $3.5 billion in outstanding notes. As of June 30, 2017, there were no borrowings outstanding under the commercial paper program. As of March 31, 2017, we had $183 million commercial paper notes outstanding with a weighted average interest rate of 1.20% . |
Pension Benefits
Pension Benefits | 3 Months Ended |
Jun. 30, 2017 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Pension Benefits | Pension Benefits The net periodic expense for our defined pension benefit plans was $6 million for the first quarters of 2018 and 2017. Cash contributions to these plans were $3 million and $4 million for the first quarters of 2018 and 2017. 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 straight-line over the average remaining future service periods and expected life expectancy. |
Hedging Activities
Hedging Activities | 3 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Hedging Activities | Hedging Activities In the normal course of business, we are exposed to interest rate and foreign exchange rate fluctuations. At times, we limit these risks through the use of derivatives such as interest rate swaps, cross currency swaps and foreign currency forward contracts. In accordance with our policy, derivatives are only used for hedging purposes. We do not use derivatives for trading or speculative purposes. Foreign currency exchange risk We conduct our business worldwide in U.S. dollars and the functional currencies of our foreign subsidiaries, including Euro, British pound sterling and Canadian dollars. Changes in foreign currency exchange rates could have a material adverse impact on our financial results that are reported in U.S. dollars. We are also exposed to foreign currency exchange rate risk related to our foreign subsidiaries, including intercompany loans denominated in non-functional currencies. We have 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 denominated in non-functional currencies. These programs reduce but do not eliminate foreign exchange rate risk. Net Investment Hedges and Derivatives Designated as Hedges We have €1.2 billion Euro-denominated notes and £450 million British pound sterling-denominated notes which hedge portions of our 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 (“Net Investment Hedges”). For all notes that are designated as net investment hedges and meet effectiveness requirements, the changes in carrying value of the notes attributable to the change in spot rates are recorded in accumulated other comprehensive income (loss) within the condensed consolidated balance sheet where they offset foreign currency translation gains and losses recorded on our net investments. To the extent foreign currency denominated notes designated as net investment hedges are ineffective, changes in value are recorded in earnings. Losses from net investment hedges recorded in other comprehensive income were $114 million during the first quarter of 2018. We did not have any ineffective portion of the net investment hedges as of June 30, 2017 and March 31, 2017. At June 30, 2017 and March 31, 2017, we had forward contracts to hedge the U.S. dollar against cash flows denominated in Canadian dollars with total gross notional values of $243 million , which were designated as cash flow hedges. These contracts will mature between March 2018 and March 2020 . From time to time, we enter into cross currency swaps to hedge intercompany loans denominated in non-functional currencies. For our cross currency swap transactions, we agree with another party to exchange, at specified intervals, one currency for another currency at a fixed exchange rate, generally set at inception, calculated by reference to agreed upon notional amounts. These cross currency swaps are designed to reduce the income statement effects arising from fluctuations in foreign exchange rates and have been designated as cash flow hedges. At June 30, 2017 and March 31, 2017, we had cross currency swaps with total gross notional amounts of approximately $3,223 million and $2,663 million , which are designated as cash flow hedges. These swaps will mature between February 2018 and January 2024. For forward contracts and cross currency swaps that are designated as cash flow hedges, the effective portion of changes in the fair value of the hedges is recorded into accumulated other comprehensive income (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 on these hedges recorded in other comprehensive income and earnings were not material in the first quarters of 2018 and 2017. Derivatives Not Designated as Hedges At June 30, 2017 and March 31, 2017, we had forward contracts to primarily hedge the U.S. dollar against cash flows denominated in Canadian dollars with total gross notional value of $177 million and $173 million . These contracts will mature through August 2017 and none of these contracts were designated for hedge accounting. Losses from these contracts were not material for the first quarters of 2018 and 2017. We also have a number of forward contracts to hedge the Euro against cash flows denominated primarily in British pound sterling and other European currencies. At June 30, 2017 and March 31, 2017, the total gross notional amounts of these contracts were $167 million and $62 million . These contracts will mature through December 2017 and none of these contracts were designated for hedge accounting. Changes in the fair values of contracts not designated as hedges are recorded directly into earnings. Gains from these contracts were recorded within operating expenses and were not material for the first quarters of 2018 and 2017. The gains or losses from these contracts are largely offset by changes in the value of the underlying intercompany foreign currency loans. Information regarding the fair value of derivatives on a gross basis is as follows: Balance Sheet Caption June 30, 2017 March 31, 2017 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 Foreign exchange contracts (current) Prepaid expenses and other $ 16 $ — $ 81 $ 17 $ — $ 81 Foreign exchange contracts (non-current) Other Noncurrent Assets 30 — 162 32 — 162 Cross currency swaps (current) Prepaid expenses and other 11 — 174 17 — 174 Cross currency swaps (non-current) Other Noncurrent Assets/Liabilities — 26 3,049 90 — 2,489 Total $ 57 $ 26 $ 156 $ — Derivatives not designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 1 $ — $ 139 $ 1 $ — $ 198 Foreign exchange contracts (current) Other accrued liabilities — 4 205 — — 37 Total $ 1 $ 4 $ 1 $ — Refer to Financial Note 13, "Fair Value Measurements," for more information on these recurring fair value measurements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements At June 30, 2017 and March 31, 2017 , the carrying amounts of cash, certain cash equivalents, restricted cash, marketable securities, receivables, drafts and accounts payable, short-term borrowings and other current liabilities approximated their estimated fair values because of the short maturity of these financial instruments. The fair value of our commercial paper was determined using quoted prices in active markets for identical liabilities, which are considered to be Level 1 inputs. Assets Measured at Fair Value on a Recurring Basis Our long-term debt is carried at amortized cost. The carrying amounts and estimated fair values of these liabilities were $7.9 billion and $8.4 billion at June 30, 2017 , and $8.4 billion and $8.7 billion at March 31, 2017 . The estimated fair value of our 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. Included in cash and cash equivalents at June 30, 2017 and March 31, 2017 were mainly investments in money market funds of $443 million and $478 million , which are reported at fair value. The fair value of the money market funds was determined by using quoted prices for identical investments in active markets, which are considered to be Level 1 inputs under the fair value measurements and disclosure guidance. The carrying value of all other cash equivalents approximates their fair value due to their relatively short-term nature. Fair values of our forward foreign currency derivatives were determined using quoted market prices of similar instruments in an active market and other observable inputs from available market information. Fair values of our foreign currency swaps were determined using the quoted 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 12, "Hedging Activities," for more information on our forward foreign currency derivatives including foreign currency forward contracts and swaps. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the quarters ended June 30, 2017 and 2016 . Liabilities Measured at Fair Value on a Nonrecurring Basis At June 30, 2017, we measured the contingent consideration liability related to our acquisition of CMM at fair value on a nonrecurring basis. Refer to Financial Note 3, “Business Combinations”. There were no assets measured at fair value on a nonrecurring basis at June 30, 2017. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities In addition to commitments and obligations in the ordinary course of business, we are subject to various claims, including claims with customers and vendors, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of our business. As described below, many of these proceedings are at preliminary stages and many seek an indeterminate amount of damages. When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure of the proceeding is provided. Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. As discussed above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimates. Significant developments in previously reported proceedings and in other litigation and claims, since the filing of our 2017 Annual Report are set out below. We are party to the legal proceedings described below. Unless otherwise stated, we are currently unable to estimate a range of reasonably possible losses for the unresolved proceedings described below. Should any one or a combination of more than one of these proceedings be successful, or should we determine to settle any or a combination of these matters, we may be required to pay substantial sums, become subject to the entry of an injunction or be forced to change the manner in which we operate our business, which could have a material adverse impact on our financial position or results of operations. Litigation, Government Subpoenas and Investigations As previously disclosed, following removal of the action captioned State of West Virginia ex rel. Morrisey v. McKesson Corporation to the United States District Court for the Southern District of West Virginia, the court remanded the matter back to state court. On July 7, 2017, the Company again removed the matter to the United States District Court for the Southern District of West Virginia (Civil Action No. 2:16-cv-03555.) Since May 24, 2017, the Company has been served with seven complaints filed in state courts in West Virginia alleging claims related to the distribution of controlled substances to pharmacies in West Virginia. These lawsuits are Mayor Reba Honaker, on behalf of the City of Welch v. West Virginia Board of Pharmacy, et al., Cabell County, West Virginia Circuit Court, Civil Action 17-C-18, removed to the United States District Court for the Southern District of West Virginia, Civil Action 1:17-cv-03364; County Commission of Lincoln County v. West Virginia Board of Pharmacy, et al., Lincoln County, West Virginia Circuit Court, Civil Action 17-C-46, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03366; Mayor Vivian Livinggood on behalf of the Town of Gilbert v. West Virginia Board of Pharmacy, et al., Mingo County, West Virginia Circuit Court, Civil Action 17-C-94, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03369; Mayor Charles Sparks on behalf of the Town of Kermit v. West Virginia Board of Pharmacy, et al., Mingo County, West Virginia Circuit Court, Civil Action 17-C-13, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03372; Mayor Robert Carlton on behalf of the City of Williamson v. West Virginia Board of Pharmacy, et al., Mingo County, West Virginia Circuit Court, Civil Action 17-C-99, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03532; The County Commission of Mercer County v. West Virginia Board of Pharmacy, et al., Mercer County, West Virginia Circuit Court, Civil Action 17-C-236; and Mayor Raaimie Barker on behalf of the Town of Chapmanville v. West Virginia Board of Pharmacy, et al., Logan County, West Virginia Circuit Court, Civil Action 17-C-168. The Company has filed motions to dismiss in all cases in which responses were due. In response to the previously disclosed case captioned Cherokee Nation v. McKesson Corporation, et al., on June 8, 2017, the Company and the other defendants in this action filed suit in the United States District Court for the Northern District of Oklahoma, McKesson Corporation, et al. v. Todd Hembree, Attorney General of the Cherokee Nation, et al., No. 4:17-cv-00323, seeking a declaratory judgment that the Cherokee Nation District Court has no jurisdiction over the claims asserted by the Cherokee Nation. On that same day, the Company and the other plaintiffs in the federal action filed a motion for a preliminary injunction enjoining the defendants from taking any action in the case pending in the tribal court. On May 25, 2017, a lawsuit was filed in Stockton County, California Superior Court against various pharmaceutical manufacturers and the Company by the County of San Joaquin, City of Stockton and Montezuma Fire Protection District. City of Stockton, et al. v. Purdue Pharma LP, et al., Case No. STK-CV-UBT-2017-5325.The suit seeks damages for the funds spent by plaintiffs on municipal services due to alleged excessive sales of opioids. The causes of action against the Company are unjust enrichment and parens patriaie claims. On July 17, 2017, this case was removed to the United States District Court for the Eastern District of California (Case No. 2:17-at-00719.) Two municipalities in Ohio, the City of Dayton and the City of Lorain, have individually filed suit against various pharmaceutical manufacturers and three wholesalers, including the Company, as well as four individual physicians. City of Dayton v. Purdue Pharma LP, et al., Montgomery County, Ohio Court of Common Pleas, No. 2017 CV 02647, filed on June 5, 2017; and City of Lorain v. Purdue Pharma LP, et al ., Lorain County, Ohio Court of Common Pleas, No. 17 CV 192705, filed on June 29, 2017. In each case, the plaintiff claims that all of the defendants engaged in unfair and deceptive acts or practices involving the marketing and sales of opioids, and created a public nuisance. Each plaintiff also contends that the distributor defendants failed to take any action to prevent or reduce the distribution of opioids. The suits contain causes of action for violation of the Ohio Consumer Sales Practices Act; deceptive trade practices; public nuisance; fraud, unjust enrichment; and negligence. On July 7, 2017, the City of Dayton case was removed to the United States District Court for the Southern District of Ohio (Case No. 3:17-cv-229). On June 12, 2017, the County of Nassau, New York filed suit against various pharmaceutical manufacturers and three wholesalers, including the Company, as well as four individual physicians. The County of Nassau v. Purdue Pharma LP, et al., Supreme Court of the State of New York, County of Nassau, Index No. 605477/2017. The plaintiff claims that all of the defendants engaged in unfair and deceptive acts or practices involving the marketing and sales of opioids, and created a public nuisance. Each plaintiff also contends that the distributor defendants failed to take any action to prevent or reduce the distribution of opioids. The suit contains causes of action for deceptive acts and practices under New York General Business Law § 349; false advertising under New York General Business Law § 350; public nuisance; violation of New York Social Services Law § 145-B; fraud, unjust enrichment; and negligence. On May 19, 2017, the plaintiff in the previously disclosed case captioned Silverman v. McKesson Corporation, filed a voluntary withdrawal of this action. 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. For example, the Company has received a request for information from the U.S. Attorney’s Office for the Eastern District of Pennsylvania relating to the use of a Company pharmacy management software system to process partially-filled prescriptions. The Company is currently responding to this request. Such subpoenas and requests also 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. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Each share of the Company’s outstanding common stock is permitted one vote on proposals presented to stockholders and is entitled to share equally in any dividends declared by the Company’s Board of Directors (the “Board”). The Company currently pays quarterly cash dividend of $0.28 per common share. On July 26, 2017, the Company’s quarterly dividend was raised from $0.28 to $0.34 per common share for dividends declared on or after such date by the Board. The Company anticipates that it will continue to pay quarterly cash dividends in the future. However, the payment and amount of future dividends remain within the discretion of the Board and will depend upon the Company's future earnings, financial condition, capital requirements and other factors. Share Repurchase Plans Stock repurchases may be made from time-to-time in open market transactions, privately negotiated transactions, through accelerated share repurchase (“ASR”) programs, or by any combination of such methods. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions under our debt obligations and other market and economic conditions. In March 2017, we entered into an ASR program with a third-party financial institution to repurchase $250 million of the Company’s common stock. We received 1.4 million shares in March 2017 and 0.3 million additional shares in April 2017. In June 2017, we also entered into another ASR program with a third-party financial institution to repurchase $250 million of the Company’s common stock. During the first quarter of 2018, we received 1.2 million shares as the initial share settlement under this 2018 ASR program and may receive additional shares at the termination of the ASR. The total authorization outstanding for repurchases of the Company’s common stock was $2.5 billion at June 30, 2017. Other Comprehensive Income (Loss) Information regarding other comprehensive income (loss) including redeemable noncontrolling interests, net of tax, by component is as follows: Quarter Ended June 30, (In millions) 2017 2016 Foreign currency translation adjustments (1) Foreign currency translation adjustments arising during period, net of income tax benefit of nil and $12 (2) (3) $ 382 $ (275 ) Reclassified to income statement, net of income tax expense of nil and nil (4) — 20 382 (255 ) Unrealized gains (losses) on net investment hedges (5) Unrealized gains (losses) on net investment hedges arising during period, net of income tax benefit of $44 and nil (70 ) — Reclassified to income statement, net of income tax expense of nil and nil — — (70 ) — Unrealized gains on cash flow hedges Unrealized gains on cash flow hedges arising during period, net of income tax expense of nil and nil 14 — Changes in retirement-related benefit plans (6) Net actuarial loss and prior service cost arising during the period, net of income tax benefit of nil and nil — — Amortization of actuarial loss and prior service costs, net of income tax expense of nil and $1 (7) 1 3 Foreign currency translation adjustments and other, net of income tax expense of nil and nil (6 ) 8 (5 ) 11 Other comprehensive income (loss), net of tax $ 321 $ (244 ) (1) Foreign currency translation adjustments primarily result from the conversion of non-U.S. dollar financial statements of our foreign subsidiary, Celesio, into the Company’s reporting currency, U.S. dollars, during the first quarters of 2018 and 2017. (2) The net foreign currency translation gains during the first quarter of 2018 were primarily due to the strengthening of the Euro and British pound sterling against the U.S. dollar from April 1, 2017 to June 30, 2017. During the first quarter of 2017, the currency translation losses were primarily due to the weakening of the Euro and British pound sterling against the U.S. dollar from April 1, 2016 to June 30, 2016. (3) The first quarter of 2018 includes net foreign currency translation gains of $115 million and the first quarter of 2017 includes net foreign currency translation losses of $67 million attributable to redeemable noncontrolling interests. (4) The first quarter of 2017 includes net foreign currency translation losses of $20 million reclassified from accumulated other comprehensive income (loss) to loss from discontinued operations, net of tax, within our condensed consolidated statements of operations due to the sale of our Brazilian pharmaceutical distribution business. (5) The first quarter of 2018 includes foreign currency losses of $114 million on the net investment hedges from the €1.2 billion Euro-denominated notes and £450 million British pound sterling-denominated notes. (6) The first quarters of 2018 and 2017 include net actuarial losses of $1 million attributable to redeemable noncontrolling interests. (7) Pre-tax amount reclassified into cost of sales and operating expenses in our condensed consolidated statements of operations. The related tax expense was reclassified into income tax expense in our condensed consolidated statements of operations. Accumulated Other Comprehensive Income (Loss) Information regarding changes in our accumulated other comprehensive income (loss), net of tax, by component for the first quarter of 2018 is as follows: (In millions) Foreign Currency Translation Adjustments, Net of Tax Unrealized Losses on Net Investment Hedges, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax Total Accumulated Other Comprehensive Income (Loss) Balance at March 31, 2017 $ (1,873 ) $ (8 ) $ (31 ) $ (229 ) $ (2,141 ) Other comprehensive income (loss) before reclassifications 382 (70 ) 14 (6 ) 320 Amounts reclassified to earnings and other — — — 1 1 Other comprehensive income (loss) 382 (70 ) 14 (5 ) 321 Less: amounts attributable to noncontrolling and redeemable noncontrolling interests 115 — — 1 116 Other comprehensive income (loss) attributable to McKesson 267 (70 ) 14 (6 ) 205 Balance at June 30, 2017 $ (1,606 ) $ (78 ) $ (17 ) $ (235 ) $ (1,936 ) |
Segment Information
Segment Information | 3 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We report our operations in two operating segments: McKesson Distribution Solutions and McKesson Technology Solutions. The factors for determining the reportable segments included the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities. We evaluate the performance of our operating segments on a number of measures, including operating profit before interest expense, income taxes and results from discontinued operations. Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows: Quarter Ended June 30, (In millions) 2017 2016 Revenues Distribution Solutions (1) North America pharmaceutical distribution and services $ 43,016 $ 41,211 International pharmaceutical distribution and services 6,382 6,330 Medical-Surgical distribution and services 1,533 1,468 Total Distribution Solutions 50,931 49,009 Technology Solutions - products and services (2) 120 724 Total Revenues $ 51,051 $ 49,733 Operating profit Distribution Solutions (3) $ 713 $ 928 Technology Solutions (4) (78 ) 168 Total 635 1,096 Corporate Expenses, Net (109 ) (105 ) Interest Expense (68 ) (79 ) Income from Continuing Operations Before Income Taxes $ 458 $ 912 (1) Revenues derived from services represent less than 2% of this segment’s total revenues. (2) 2018 revenues for the Technology Solutions segment include the results of our EIS business. Effective April 1, 2017, our RHP business was transitioned from the Technology Solutions segment to the Distribution Solutions segment. The first quarter of 2017 included the majority of our Core MTS Business which was contributed to Change Healthcare on March 1, 2017. (3) Distribution Solutions operating profit for the first quarters of 2018 and 2017 include $26 million and $ 47 million in pre-tax charges related to our last-in, first-out (“LIFO”) method of accounting for inventories. LIFO expense was less in 2018 primarily due to the lower full year expectations for net price increases compared to the same period a year ago. Additionally, the first quarter of 2017 includes $142 million of net cash proceeds representing our share of net settlements of antitrust class action lawsuits against drug manufacturers. (4) Operating profit for our Technology Solutions segment for the first quarter of 2018 includes our EIS business, our proportionate share of loss from Change Healthcare of $120 million and a pre-tax gain of $37 million from the Healthcare Technology Net Asset Exchange related to the final net working capital and other adjustments. |
Significant Accounting Polici23
Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The condensed consolidated financial statements of McKesson Corporation (“McKesson,” the “Company,” or “we” and other similar pronouns) include the financial statements of all wholly-owned subsidiaries and majority‑owned or controlled companies. For those consolidated subsidiaries where our 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” on 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. We consider ourselves to control an entity if we are the majority owner of and have voting control over such entity. We also assess control through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business entity is the primary beneficiary of the VIE. We consolidate VIEs when it is determined that we are the primary beneficiary of the VIE. Investments in business entities in which we do not have control, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. Refer to Financial Note 2, “Healthcare Technology Net Asset Exchange” for further information on our equity method investment in Change Healthcare, LLC. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and disclosures normally included in the annual consolidated financial statements. |
Use of Estimates | To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these financial statements and income and expenses during the reporting period. Actual amounts may differ from these estimated amounts. In our opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. The results of operations for the quarter ended June 30, 2017 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 our Annual Report on Form 10-K for the fiscal year ended March 31, 2017 previously filed with the SEC on May 22, 2017 (“2017 Annual Report”). |
Fiscal Period | The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements Investments: In the first quarter of 2018, we adopted amended guidance for the equity method of accounting. The amended guidance simplifies the transition to the equity method of accounting. This standard eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Additionally, at the point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income (loss) will be recognized through earnings. The adoption of this amended guidance did not have a material effect on our condensed consolidated financial statements. Derivatives and Hedging: In the first quarter of 2018, we adopted amended guidance for derivative instrument novations. The amendments clarify that a novation, a change in the counterparty, to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided all other hedge accounting criteria continue to be met. The adoption of this amended guidance did not have an effect on our condensed consolidated financial statements. Consolidation: In the first quarter of 2018, we adopted amended guidance for VIEs. The amended guidance requires a single decision maker of a VIE to consider indirect economic interests in the entity held through related parties that are under common control on a proportionate basis when determining whether it is the primary beneficiary of that VIE. This amendment does not change the existing characteristics of a primary beneficiary. The adoption of this amended guidance did not have a material effect on our condensed consolidated financial statements. Inventory: In the first quarter of 2018, we adopted amended guidance for the subsequent measurement of inventory. The amended guidance requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The requirement would replace the current lower of cost or market evaluation. Accounting guidance is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail method. The adoption of this amended guidance did not have a material effect on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted Share-Based Payments: In May 2017, amended guidance was issued for employee share-based payment awards. This amendment provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the amended guidance, we are required to account for the effects of a modification if the fair value, the vesting conditions or the classification (as an equity instrument or a liability instrument) of the modified award change from that of the original award immediately before the modification. The amended guidance is effective for us on a prospective basis commencing in the first quarter of 2019. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Premium Amortization of Purchased Callable Debt Securities: In March 2017, amended guidance was issued to shorten the amortization period for certain callable debt securities held at a premium. The amended guidance requires the premium of callable debt securities to be amortized to the earliest call date but does not require an accounting change for securities held at a discount as they would still be amortized to maturity. The amended guidance is effective for us on a modified retrospective basis commencing in the first quarter of 2020. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Compensation - Retirement Benefits: In March 2017, amended guidance was issued which requires us to report the service cost component of defined benefit pension plans and other postretirement plans in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net benefit cost are required to be presented in the statements of operations separately from the service cost component. This amended guidance is effective for us in the first quarter of 2019 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Derecognition of Nonfinancial Assets: In February 2017, amended guidance was issued that defines the term “in substance nonfinancial asset” as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the asset that is promised is concentrated in nonfinancial assets. The scope of this amendment includes nonfinancial assets transferred within a legal entity including a parent entity’s transfer of nonfinancial assets by transferring ownership interests in consolidated subsidiaries. The amendment excludes all businesses and nonprofit activities from its scope and therefore all entities, with limited exceptions, are required to account for the derecognition of a business or nonprofit activity in accordance with the consolidation guidance once this amended guidance becomes effective. We are required to apply this amended guidance at the same time we apply the amended revenue guidance in the first quarter of 2019. It allows for either full retrospective adoption or modified retrospective adoption. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Goodwill Impairment Testing: In January 2017, amended guidance was issued to simplify goodwill impairment testing by eliminating the second step of the impairment test. Under the second step, the implied fair value of goodwill is calculated in a hypothetical analysis by subtracting the fair value of all assets and liabilities of the reporting unit, including any unrecognized intangible assets, from the fair value of the reporting unit calculated in the first step of the impairment test. If the carrying value of goodwill for the reporting unit exceeds the implied fair value of goodwill, an impairment charge is recorded for that excess. The amended guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. The amended guidance is effective for us on a prospective basis commencing in the first quarter of 2021. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Business Combinations: In January 2017, amended guidance was issued to clarify the definition of a business to assist entities in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amended guidance provides a practical screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amended guidance requires that to be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create output. The amended guidance is effective for us commencing in the first quarter of 2019 on a prospective basis. Early adoption is permitted in certain circumstances. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Restricted Cash: In November 2016, amended guidance was issued that requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Transfers between cash and cash equivalents and restricted cash or restricted cash equivalents are not reported as cash flow activities in the statement of cash flows. The amended guidance is effective for us commencing in the first quarter of 2019 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory: In October 2016, amended guidance was issued to require entities to recognize income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amended guidance is effective for us commencing in the first quarter of 2019 on a modified retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments: In August 2016, amended guidance was issued to provide clarification on cash flow classification related to eight specific issues including contingent consideration payments made after a business combination and distributions received from equity method investees. The amended guidance is effective for us commencing in the first quarter of 2019 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Financial Instruments - Credit Losses: In June 2016, amended guidance was issued, which will change the impairment model for most financial assets and require additional disclosures. The amended guidance requires financial assets that are measured at amortized cost, be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of financial assets. The amended guidance also requires us to consider historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount in estimating credit losses. The amended guidance becomes effective for us commencing in the first quarter of 2021 and will be applied through a cumulative-effect adjustment to the beginning retained earnings in the year of adoption. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Leases: In February 2016, amended guidance was issued for lease arrangements. The amended standard will require lessees to recognize assets and liabilities on the balance sheet for all leases with terms longer than 12 months and provide enhanced disclosures on key information of leasing arrangements. The amended guidance is effective for us commencing in the first quarter of 2020, on a modified retrospective basis. Early adoption is permitted. We plan to adopt the new standard on the effective date and are currently evaluating the impact of this amended guidance on our consolidated financial statements. We anticipate that the adoption of the amended lease guidance will materially affect our condensed consolidated balance sheet and will require certain changes to our systems and processes. Financial Instruments: In January 2016, amended guidance was issued that requires equity investments to be measured at fair value with changes in fair value recognized in net income and enhanced disclosures about those investments. This guidance also simplifies the impairment assessments of equity investments without readily determinable fair value. The investments that are accounted for under the equity method of accounting or result in consolidation of the investee are excluded from the scope of this amended guidance. The amended guidance will become effective for us commencing in the first quarter of 2019 and will be adopted through a cumulative-effect adjustment. Early adoption is not permitted except for certain provisions. We are currently evaluating the impact of this amended guidance on our condensed consolidated financial statements. Revenue Recognition: In May 2014, amended guidance was issued for recognizing revenue from contracts with customers. The amended guidance eliminates industry specific guidance and applies to all companies. Revenues will be recognized when an entity satisfies a performance obligation by transferring control of a promised good or service to a customer in an amount that reflects the consideration to which the entity expects to be entitled for that good or service. Revenue from a contract that contains multiple performance obligations is allocated to each performance obligation generally on a relative standalone selling price basis. The amended guidance also requires additional quantitative and qualitative disclosures. In March, April and May 2016, amended guidance was further issued including clarifying guidance on principal versus agent considerations, ability to choose an accounting policy election to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good, and provided certain scope improvements and practical expedients. The amended standard is effective for us commencing in the first quarter of 2019 and allows for either full retrospective adoption or modified retrospective adoption. Early adoption is permitted. While we continue to evaluate the effect of the amended standard, we have conducted a preliminary assessment for our Distribution Solutions segment and do not expect adoption of the amended standard to have a material impact on our consolidated financial statements. The majority of our Distribution Solutions segment’s revenue is generated from sales of pharmaceutical products, which will continue to be recognized when control of the goods is transferred to the customer. We generally anticipate having substantially similar performance obligations under the amended guidance as compared with deliverables and units of account currently being recognized. We intend to make policy elections within the amended standard that are consistent with our current accounting. Our preliminary assessment does not include certain businesses for which we are exploring strategic alternatives and we continue to evaluate the potential impact of the recent acquisitions. This preliminary assessment is subject to change prior to adoption. Additionally, we anticipate adopting this amended standard on a modified retrospective basis in our first quarter of 2019. |
Commitments and Contingencies | When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure of the proceeding is provided. Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. As discussed above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimates. |
Healthcare Technology Net Ass24
Healthcare Technology Net Asset Exchange (Tables) | 3 Months Ended |
Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Summarized Equity Method Investment Financial Informations | ummarized financial information (unaudited) of Change Healthcare is as follows: (In millions) Quarter Ended June 30, 2017 Revenues $ 865 Loss from Continuing Operations (84 ) Net Loss (84 ) |
Redeemable Noncontrolling Int25
Redeemable Noncontrolling Interests and Noncontrolling Interests (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Changes in Redeemable Noncontrolling Interests and Noncontrolling Interests | Changes in redeemable noncontrolling interests and noncontrolling interests for the first quarter of 2018 were as follows: (In millions) Noncontrolling Interests Redeemable Noncontrolling Interests Balance, March 31, 2017 $ 178 $ 1,327 Net income attributable to noncontrolling interests 47 9 Other comprehensive income — 116 Reclassification of recurring compensation to other accrued liabilities — (9 ) Payments to noncontrolling interests (18 ) — Exercises of Put Right — (53 ) Other 3 — Balance, June 30, 2017 $ 210 $ 1,390 Changes in redeemable noncontrolling interests and noncontrolling interests for the first quarter of 2017 were as follows: (In millions) Noncontrolling Interests Redeemable Noncontrolling Interests Balance, March 31, 2016 $ 84 $ 1,406 Net income attributable to noncontrolling interests 7 11 Other comprehensive loss — (66 ) Reclassification of recurring compensation to other accrued liabilities — (11 ) Purchase of noncontrolling interests 152 — Other (1 ) — Balance, June 30, 2016 $ 242 $ 1,340 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Jun. 30, 2017 | |
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 are as follows: Quarter Ended June 30, (In millions, except per share amounts) 2017 2016 Income from continuing operations $ 363 $ 673 Net income attributable to noncontrolling interests (56 ) (18 ) Income from continuing operations attributable to McKesson 307 655 Income (loss) from discontinued operations, net of tax 2 (113 ) Net income attributable to McKesson $ 309 $ 542 Weighted average common shares outstanding: Basic 211 225 Effect of dilutive securities: Options to purchase common stock 1 1 Restricted stock units 1 2 Diluted 213 228 Earnings (loss) per common share attributable to McKesson: (1) Diluted Continuing operations $ 1.44 $ 2.88 Discontinued operations 0.01 (0.50 ) Total $ 1.45 $ 2.38 Basic Continuing operations $ 1.46 $ 2.91 Discontinued operations — (0.50 ) Total $ 1.46 $ 2.41 (1) Certain computations may reflect rounding adjustments. |
Goodwill and Intangible Asset27
Goodwill and Intangible Assets, Net (Tables) | 3 Months Ended |
Jun. 30, 2017 | |
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) Distribution Solutions Technology Solutions Total Balance, March 31, 2017 $ 10,132 $ 454 $ 10,586 Goodwill acquired 940 — 940 Acquisition accounting, transfers and other adjustments (1) 324 (330 ) (6 ) Foreign currency translation adjustments, net 230 — 230 Balance, June 30, 2017 $ 11,626 $ 124 $ 11,750 (1) Effective April 1, 2017, our RHP business was transitioned from the Technology Solutions segment to the Distribution Solutions segment. |
Schedule of information regarding intangible assets | Information regarding intangible assets is as follows: June 30, 2017 March 31, 2017 (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 $ 3,411 $ (1,392 ) $ 2,019 $ 2,893 $ (1,295 ) $ 1,598 Service agreements 13 1,023 (332 ) 691 1,009 (316 ) 693 Pharmacy licenses 25 772 (164 ) 608 741 (150 ) 591 Trademarks and trade names 15 870 (136 ) 734 845 (124 ) 721 Technology 5 151 (71 ) 80 69 (64 ) 5 Other 5 261 (155 ) 106 201 (144 ) 57 Total $ 6,488 $ (2,250 ) $ 4,238 $ 5,758 $ (2,093 ) $ 3,665 |
Hedging Activities (Tables)
Hedging Activities (Tables) | 3 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of information regarding the fair value of derivatives on a gross basis | Information regarding the fair value of derivatives on a gross basis is as follows: Balance Sheet Caption June 30, 2017 March 31, 2017 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 Foreign exchange contracts (current) Prepaid expenses and other $ 16 $ — $ 81 $ 17 $ — $ 81 Foreign exchange contracts (non-current) Other Noncurrent Assets 30 — 162 32 — 162 Cross currency swaps (current) Prepaid expenses and other 11 — 174 17 — 174 Cross currency swaps (non-current) Other Noncurrent Assets/Liabilities — 26 3,049 90 — 2,489 Total $ 57 $ 26 $ 156 $ — Derivatives not designated for hedge accounting Foreign exchange contracts (current) Prepaid expenses and other $ 1 $ — $ 139 $ 1 $ — $ 198 Foreign exchange contracts (current) Other accrued liabilities — 4 205 — — 37 Total $ 1 $ 4 $ 1 $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of information regarding other comprehensive income (loss) including noncontrolling and redeemable noncontrolling interests, net of tax, by component | Information regarding other comprehensive income (loss) including redeemable noncontrolling interests, net of tax, by component is as follows: Quarter Ended June 30, (In millions) 2017 2016 Foreign currency translation adjustments (1) Foreign currency translation adjustments arising during period, net of income tax benefit of nil and $12 (2) (3) $ 382 $ (275 ) Reclassified to income statement, net of income tax expense of nil and nil (4) — 20 382 (255 ) Unrealized gains (losses) on net investment hedges (5) Unrealized gains (losses) on net investment hedges arising during period, net of income tax benefit of $44 and nil (70 ) — Reclassified to income statement, net of income tax expense of nil and nil — — (70 ) — Unrealized gains on cash flow hedges Unrealized gains on cash flow hedges arising during period, net of income tax expense of nil and nil 14 — Changes in retirement-related benefit plans (6) Net actuarial loss and prior service cost arising during the period, net of income tax benefit of nil and nil — — Amortization of actuarial loss and prior service costs, net of income tax expense of nil and $1 (7) 1 3 Foreign currency translation adjustments and other, net of income tax expense of nil and nil (6 ) 8 (5 ) 11 Other comprehensive income (loss), net of tax $ 321 $ (244 ) (1) Foreign currency translation adjustments primarily result from the conversion of non-U.S. dollar financial statements of our foreign subsidiary, Celesio, into the Company’s reporting currency, U.S. dollars, during the first quarters of 2018 and 2017. (2) The net foreign currency translation gains during the first quarter of 2018 were primarily due to the strengthening of the Euro and British pound sterling against the U.S. dollar from April 1, 2017 to June 30, 2017. During the first quarter of 2017, the currency translation losses were primarily due to the weakening of the Euro and British pound sterling against the U.S. dollar from April 1, 2016 to June 30, 2016. (3) The first quarter of 2018 includes net foreign currency translation gains of $115 million and the first quarter of 2017 includes net foreign currency translation losses of $67 million attributable to redeemable noncontrolling interests. (4) The first quarter of 2017 includes net foreign currency translation losses of $20 million reclassified from accumulated other comprehensive income (loss) to loss from discontinued operations, net of tax, within our condensed consolidated statements of operations due to the sale of our Brazilian pharmaceutical distribution business. (5) The first quarter of 2018 includes foreign currency losses of $114 million on the net investment hedges from the €1.2 billion Euro-denominated notes and £450 million British pound sterling-denominated notes. (6) The first quarters of 2018 and 2017 include net actuarial losses of $1 million attributable to redeemable noncontrolling interests. (7) Pre-tax amount reclassified into cost of sales and operating expenses in our condensed consolidated statements of operations. The related tax expense was reclassified into income tax expense in our condensed consolidated statements of operations. |
Schedule of information regarding changes in accumulated other comprehensive income (loss), net of tax, by component | Information regarding changes in our accumulated other comprehensive income (loss), net of tax, by component for the first quarter of 2018 is as follows: (In millions) Foreign Currency Translation Adjustments, Net of Tax Unrealized Losses on Net Investment Hedges, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax Total Accumulated Other Comprehensive Income (Loss) Balance at March 31, 2017 $ (1,873 ) $ (8 ) $ (31 ) $ (229 ) $ (2,141 ) Other comprehensive income (loss) before reclassifications 382 (70 ) 14 (6 ) 320 Amounts reclassified to earnings and other — — — 1 1 Other comprehensive income (loss) 382 (70 ) 14 (5 ) 321 Less: amounts attributable to noncontrolling and redeemable noncontrolling interests 115 — — 1 116 Other comprehensive income (loss) attributable to McKesson 267 (70 ) 14 (6 ) 205 Balance at June 30, 2017 $ (1,606 ) $ (78 ) $ (17 ) $ (235 ) $ (1,936 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of financial information relating to reportable operating segments and reconciliations to the condensed consolidated totals | Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows: Quarter Ended June 30, (In millions) 2017 2016 Revenues Distribution Solutions (1) North America pharmaceutical distribution and services $ 43,016 $ 41,211 International pharmaceutical distribution and services 6,382 6,330 Medical-Surgical distribution and services 1,533 1,468 Total Distribution Solutions 50,931 49,009 Technology Solutions - products and services (2) 120 724 Total Revenues $ 51,051 $ 49,733 Operating profit Distribution Solutions (3) $ 713 $ 928 Technology Solutions (4) (78 ) 168 Total 635 1,096 Corporate Expenses, Net (109 ) (105 ) Interest Expense (68 ) (79 ) Income from Continuing Operations Before Income Taxes $ 458 $ 912 (1) Revenues derived from services represent less than 2% of this segment’s total revenues. (2) 2018 revenues for the Technology Solutions segment include the results of our EIS business. Effective April 1, 2017, our RHP business was transitioned from the Technology Solutions segment to the Distribution Solutions segment. The first quarter of 2017 included the majority of our Core MTS Business which was contributed to Change Healthcare on March 1, 2017. (3) Distribution Solutions operating profit for the first quarters of 2018 and 2017 include $26 million and $ 47 million in pre-tax charges related to our last-in, first-out (“LIFO”) method of accounting for inventories. LIFO expense was less in 2018 primarily due to the lower full year expectations for net price increases compared to the same period a year ago. Additionally, the first quarter of 2017 includes $142 million of net cash proceeds representing our share of net settlements of antitrust class action lawsuits against drug manufacturers. (4) Operating profit for our Technology Solutions segment for the first quarter of 2018 includes our EIS business, our proportionate share of loss from Change Healthcare of $120 million and a pre-tax gain of $37 million from the Healthcare Technology Net Asset Exchange related to the final net working capital and other adjustments. |
Healthcare Technology Net Ass31
Healthcare Technology Net Asset Exchange (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Mar. 01, 2017 | |
Schedule of Equity Method Investments [Line Items] | ||||
Gain on Healthcare Technology Net Asset Exchange | $ 37 | $ 0 | ||
Net losses from Change Healthcare | 120 | $ 0 | ||
Carrying value of investment | 3,855 | $ 4,063 | ||
Tax Receivable Agreement (“TRA”) | Change Healthcare, LLC (“Change Healthcare”) | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Noncurrent liability | 136 | 136 | ||
Joint Venture | Transition Services Agreements (“TSA”) | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Reimbursements for transition services fees | 37 | |||
Change Healthcare, LLC (“Change Healthcare”) | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Proportionate share of net loss reported by joint venture | 59 | |||
Change Healthcare, LLC (“Change Healthcare”) | Core MTS Businesses | Operating Segments | Technology Solutions | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Gain on Healthcare Technology Net Asset Exchange | 37 | 3,947 | ||
Gain from sale of business, after tax | 22 | $ 3,018 | ||
Change Healthcare, LLC (“Change Healthcare”) | Joint Venture | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Expected ownership interest in the joint venture (percent) | 70.00% | |||
Receivable from Change Healthcare | 126 | |||
Net losses from Change Healthcare | 120 | |||
Carrying value of investment | 3,855 | |||
Excess of carrying value of investment over proportional share of book value | 4,768 | |||
Proportionate share of net loss reported by joint venture | $ 84 |
Healthcare Technology Net Ass32
Healthcare Technology Net Asset Exchange - Summarized Financial Information (Details) - Change Healthcare, LLC (“Change Healthcare”) $ in Millions | 3 Months Ended |
Jun. 30, 2017USD ($) | |
Schedule of Equity Method Investments [Line Items] | |
Net Loss | $ (59) |
Joint Venture | |
Schedule of Equity Method Investments [Line Items] | |
Revenues | 865 |
Loss from Continuing Operations | (84) |
Net Loss | $ (84) |
Business Combinations (Details)
Business Combinations (Details) $ in Millions, CAD in Billions | Apr. 03, 2017USD ($) | Dec. 28, 2016USD ($)pharmacy | Dec. 28, 2016CAD | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) |
Business Acquisition [Line Items] | |||||||
Net purchase consideration | $ 1,485 | $ 1,819 | |||||
Goodwill | 11,750 | $ 10,586 | |||||
CoverMyMeds, LLC (CMM) | |||||||
Business Acquisition [Line Items] | |||||||
Net purchase consideration | $ 1,300 | ||||||
Assets acquired as of the acquisition date, excluding goodwill and intangibles | 54 | ||||||
Liabilities assumed as of the acquisition date | 8 | ||||||
Goodwill | 854 | ||||||
Acquired identifiable intangibles | $ 502 | ||||||
Rexall Health | CANADA | |||||||
Business Acquisition [Line Items] | |||||||
Net purchase consideration | $ 2,100 | CAD 2.9 | |||||
Assets acquired as of the acquisition date, excluding goodwill and intangibles | 674 | ||||||
Liabilities assumed as of the acquisition date | 212 | ||||||
Goodwill | 950 | ||||||
Acquired identifiable intangibles | $ 872 | ||||||
Number of retail pharmacies | pharmacy | 470 | ||||||
Measurement period adjustments to provisional fair value of intangibles | 17 | ||||||
Discontinued Operations, Held-for-sale or Disposed of by Sale | |||||||
Business Acquisition [Line Items] | |||||||
Assets of stores to be divested | $ 193 | ||||||
Discontinued Operations, Held-for-sale or Disposed of by Sale | Rexall Health | CANADA | |||||||
Business Acquisition [Line Items] | |||||||
Number of retail pharmacies | pharmacy | 27 | ||||||
Additional amount, Up to | CoverMyMeds, LLC (CMM) | |||||||
Business Acquisition [Line Items] | |||||||
Contingent consideration | $ 200 | ||||||
Customer relationships | CoverMyMeds, LLC (CMM) | |||||||
Business Acquisition [Line Items] | |||||||
Weighted average life of intangibles | 17 years | ||||||
Customer relationships | Rexall Health | CANADA | |||||||
Business Acquisition [Line Items] | |||||||
Weighted average life of intangibles | 19 years | 19 years | |||||
Trade Names | Rexall Health | CANADA | |||||||
Business Acquisition [Line Items] | |||||||
Weighted average life of intangibles | 19 years | 19 years | |||||
Estimate of Fair Value | CoverMyMeds, LLC (CMM) | |||||||
Business Acquisition [Line Items] | |||||||
Contingent consideration | $ 113 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - Brazil Distribution [Member] $ in Millions | 3 Months Ended |
Jun. 30, 2016USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
After-tax charge recognized upon settlement of indemnification matters | $ 113 |
Payment related to the sake of Brazilian pharmaceutical distribution business | $ 100 |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) - Cost Alignment Plan - USD ($) $ in Millions | 3 Months Ended | 16 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Mar. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Pre-tax restructuring charges incurred to-date | $ 246 | |||
Pre-tax charges recorded during period | $ 9 | |||
Other Accrued Liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring liabilities | $ 64 | 64 | $ 71 | |
Noncurrent Liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring liabilities | 35 | 35 | $ 35 | |
Severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Payments for severance | 14 | $ 45 | ||
Minimum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected total pre-tax charges | 250 | 250 | ||
Maximum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected total pre-tax charges | $ 270 | $ 270 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense related to continuing operations | $ 95 | $ 239 |
Net discrete tax expense (benefit) | $ 3 | (35) |
Tax benefit recognized related to excess tax benefits arising from adoption of ASU 2016-09 | $ 37 | |
Income tax rate (as a percent) | 20.70% | 26.20% |
Unrecognized tax benefits | $ 516 | |
Unrecognized tax benefits that would reduce income tax expense and the effective tax rate | 371 | |
Decrease in unrecognized tax benefits that could result from audit resolutions | $ 60 |
Redeemable Noncontrolling Int37
Redeemable Noncontrolling Interests and Noncontrolling Interests - Narrative (Details) shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Jun. 30, 2017USD ($)shares | Jun. 30, 2016USD ($) | Dec. 31, 2014€ / shares | Jun. 30, 2017€ / shares | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | |
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 to acquire shares of Celesio | $ 50 | ||||||
Number of redeemable noncontrolling interest shares repurchased (shares) | shares | 1.9 | ||||||
Carrying value of redeemable noncontrolling interests | $ 1,390 | $ 1,327 | |||||
Maximum redemption value of redeemable noncontrolling interest | $ 1,240 | $ 1,210 | |||||
Ownership percentage (as a percent) | 77.00% | 76.00% | |||||
Noncontrolling Interests | $ 210 | $ 178 | |||||
Net income attributable to noncontrolling interests | $ 56 | $ 18 | |||||
Net income attributable to McKesson and transfers from noncontrolling interests | 312 | ||||||
Celesio | |||||||
Noncontrolling Interest [Line Items] | |||||||
Common Stock, Dividends, Per Share, Cash Paid | € / shares | € 0.83 | ||||||
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest | 9 | 11 | |||||
Noncontrolling Interest | |||||||
Noncontrolling Interest [Line Items] | |||||||
Decrease in redeemable noncontrolling interests | 0 | ||||||
Noncontrolling Interests | 242 | 210 | 178 | $ 84 | |||
Net income attributable to noncontrolling interests | 47 | 7 | |||||
Redeemable Noncontrolling Interest | |||||||
Noncontrolling Interest [Line Items] | |||||||
Decrease in redeemable noncontrolling interests | 53 | ||||||
Carrying value of redeemable noncontrolling interests | 1,340 | $ 1,390 | $ 1,327 | $ 1,406 | |||
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest | 9 | $ 11 | |||||
Additional Paid-in Capital | |||||||
Noncontrolling Interest [Line Items] | |||||||
Effect of changes in ownership interests with noncontrollling interests | $ 3 |
Redeemable Noncontrolling Int38
Redeemable Noncontrolling Interests and Noncontrolling Interests - Schedule of Changes in Redeemable Noncontrolling Interests and Noncontrolling Interests (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Noncontrolling Interest [Line Items] | ||
Beginning balance | $ 178 | |
Net income attributable to noncontrolling interests | 56 | $ 18 |
Other comprehensive income (loss) | 116 | |
Ending balance | 210 | |
Redeemable Noncontrolling Interests | ||
Beginning balance | 1,327 | |
Other comprehensive income (loss) | 116 | |
Ending balance | 1,390 | |
Noncontrolling Interest | ||
Noncontrolling Interest [Line Items] | ||
Beginning balance | 178 | 84 |
Net income attributable to noncontrolling interests | 47 | 7 |
Other comprehensive income (loss) | 0 | 0 |
Payments to noncontrolling interests | (18) | |
Purchase of noncontrolling interests | 152 | |
Other | 3 | (1) |
Ending balance | 210 | 242 |
Redeemable Noncontrolling Interests | ||
Other comprehensive income (loss) | 0 | 0 |
Payments to noncontrolling interests | (18) | |
Exercise of Put Right | 0 | |
Purchase of noncontrolling interests | 152 | |
Other | 3 | (1) |
Redeemable Noncontrolling Interest | ||
Noncontrolling Interest [Line Items] | ||
Other comprehensive income (loss) | 116 | (66) |
Payments to noncontrolling interests | 0 | |
Purchase of noncontrolling interests | 0 | |
Other | 0 | 0 |
Redeemable Noncontrolling Interests | ||
Beginning balance | 1,327 | 1,406 |
Net income attributable to noncontrolling interests | 9 | 11 |
Other comprehensive income (loss) | 116 | (66) |
Reclassification of recurring compensation to other accrued liabilities | (9) | (11) |
Payments to noncontrolling interests | 0 | |
Exercise of Put Right | (53) | |
Purchase of noncontrolling interests | 0 | |
Other | 0 | 0 |
Ending balance | $ 1,390 | $ 1,340 |
Earnings Per Common Share - Sch
Earnings Per Common Share - Schedule of Computation for Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||
Income from continuing operations | $ 363 | $ 673 |
Net income attributable to noncontrolling interests | (56) | (18) |
Income from continuing operations attributable to McKesson | 307 | 655 |
Income (loss) from discontinued operations, net of tax | 2 | (113) |
Net Income Attributable to McKesson Corporation | $ 309 | $ 542 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 211 | 225 |
Effect of dilutive securities: | ||
Options to purchase common stock (in shares) | 1 | 1 |
Restricted stock units (in shares) | 1 | 2 |
Diluted (in shares) | 213 | 228 |
Diluted | ||
Continuing operations (in dollars per share) | $ 1.44 | $ 2.88 |
Discontinued operations (in dollars per share) | 0.01 | (0.50) |
Total (in dollars per share) | 1.45 | 2.38 |
Basic | ||
Continuing operations (in dollars per share) | 1.46 | 2.91 |
Discontinued operations (in dollars per share) | 0 | (0.50) |
Total (in dollars per share) | $ 1.46 | $ 2.41 |
Earnings Per Common Share - Nar
Earnings Per Common Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||
Potentially dilutive securities excluded from computations of diluted net earnings per common share (in shares) | 2 | 2 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets, Net - Schedule of Changes in the Carrying Amount of Goodwill and Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Mar. 31, 2017 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 10,586 | |
Goodwill acquired | 940 | |
Acquisition accounting, transfers and other adjustments | (6) | |
Foreign currency translation adjustments, net | 230 | |
Ending balance | 11,750 | |
Accumulated goodwill impairment losses | 290 | $ 290 |
Distribution Solutions | ||
Goodwill [Roll Forward] | ||
Beginning balance | 10,132 | |
Goodwill acquired | 940 | |
Acquisition accounting, transfers and other adjustments | 324 | |
Foreign currency translation adjustments, net | 230 | |
Ending balance | 11,626 | |
Technology Solutions | ||
Goodwill [Roll Forward] | ||
Beginning balance | 454 | |
Goodwill acquired | 0 | |
Acquisition accounting, transfers and other adjustments | (330) | |
Foreign currency translation adjustments, net | 0 | |
Ending balance | $ 124 |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets, Net - Schedule of Information Regarding Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Mar. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 6,488 | $ 5,758 |
Accumulated Amortization | (2,250) | (2,093) |
Net Carrying Amount | $ 4,238 | 3,665 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 12 years | |
Gross Carrying Amount | $ 3,411 | 2,893 |
Accumulated Amortization | (1,392) | (1,295) |
Net Carrying Amount | $ 2,019 | 1,598 |
Service agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 13 years | |
Gross Carrying Amount | $ 1,023 | 1,009 |
Accumulated Amortization | (332) | (316) |
Net Carrying Amount | $ 691 | 693 |
Pharmacy licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 25 years | |
Gross Carrying Amount | $ 772 | 741 |
Accumulated Amortization | (164) | (150) |
Net Carrying Amount | $ 608 | 591 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 15 years | |
Gross Carrying Amount | $ 870 | 845 |
Accumulated Amortization | (136) | (124) |
Net Carrying Amount | $ 734 | 721 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 5 years | |
Gross Carrying Amount | $ 151 | 69 |
Accumulated Amortization | (71) | (64) |
Net Carrying Amount | $ 80 | 5 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period (years) | 5 years | |
Gross Carrying Amount | $ 261 | 201 |
Accumulated Amortization | (155) | (144) |
Net Carrying Amount | $ 106 | $ 57 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets, Net - Narrative - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Accumulated goodwill impairment losses | $ 290 | $ 290 | |
Amortization expense of intangible assets | 121 | $ 115 | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |||
Estimated annual amortization expense, remainder of 2018 | 328 | ||
Estimated annual amortization expense, 2019 | 420 | ||
Estimated annual amortization expense, 2020 | 405 | ||
Estimated annual amortization expense, 2021 | 393 | ||
Estimated annual amortization expense, 2022 | 361 | ||
Estimated annual amortization expense, thereafter | $ 2,331 |
Debt and Financing Activities -
Debt and Financing Activities - Long Term Debt (Details) $ in Millions | 3 Months Ended | ||
Jun. 30, 2017EUR (€) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||
Long-term debt outstanding | $ 7,949 | $ 8,362 | |
Term Loan | Bonds | |||
Debt Instrument [Line Items] | |||
Repayment of term loan | € | € 500,000,000 | ||
Current Portion of Long-term Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt outstanding | $ 525 | $ 1,057 |
Debt and Financing Activities45
Debt and Financing Activities - Revolving Credit Facilities (Details) | 3 Months Ended |
Jun. 30, 2017USD ($) | |
Revolving Credit Facility | Senior Unsecured Revolving Credit Facility (Global Facility) | |
Line of Credit Facility [Line Items] | |
Syndicated senior unsecured revolving credit facility | $ 3,500,000,000 |
Syndicated senior unsecured revolving credit facility term | 5 years |
Credit facility, aggregate sublimit | $ 3,150,000,000 |
Debt to capital covenant ratio (no greater than) | 0.65 |
Amounts outstanding under facility | $ 0 |
Line of Credit | |
Line of Credit Facility [Line Items] | |
Syndicated senior unsecured revolving credit facility | $ 244,000,000 |
Debt and Financing Activities46
Debt and Financing Activities - Commercial Paper (Details) - Commercial Paper - USD ($) | Jun. 30, 2017 | Mar. 31, 2017 |
Debt Instrument [Line Items] | ||
Outstanding notes (up to) | $ 3,500,000,000 | |
Commercial paper | $ 0 | $ 183,000,000 |
Weighted average interest rate (percent) | 1.20% |
Pension Benefits - Narrative (D
Pension Benefits - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||
Net periodic pension expense | $ 6 | $ 6 |
Cash contributions to the plans | $ 3 | $ 4 |
Percentage threshold of greater of projected benefit obligation or market value of assets (percent) | 10.00% |
Hedging Activities - Narrative
Hedging Activities - Narrative (Details) £ in Millions, $ in Millions, € in Billions | 3 Months Ended | ||||
Jun. 30, 2017USD ($) | Jun. 30, 2017EUR (€) | Jun. 30, 2017GBP (£) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | |
Derivative [Line Items] | |||||
Long-term debt outstanding | $ 7,949 | $ 8,362 | |||
Foreign Exchange Contract | Derivatives Designated for Hedge Accounting | |||||
Derivative [Line Items] | |||||
Notional values of financial instruments | 243 | 243 | |||
Foreign Exchange Contract | Derivatives not Designated for Hedge Accounting | |||||
Derivative [Line Items] | |||||
Notional values of financial instruments | 167 | 62 | |||
Cross Currency Swap | Derivatives Designated for Hedge Accounting | |||||
Derivative [Line Items] | |||||
Notional values of financial instruments | 3,223 | 2,663 | |||
Forward Contracts | Derivatives not Designated for Hedge Accounting | |||||
Derivative [Line Items] | |||||
Notional values of financial instruments | $ 177 | $ 173 | |||
Net Investment Hedging | |||||
Derivative [Line Items] | |||||
Losses from net investment hedges recorded in other comprehensive income | $ 114 | ||||
Euro Denominated Notes | Term Loan | |||||
Derivative [Line Items] | |||||
Long-term debt outstanding | € | € 1.2 | ||||
British Pound Sterling Denominated Notes | Term Loan | |||||
Derivative [Line Items] | |||||
Long-term debt outstanding | £ | £ 450 |
Hedging Activities - Derivative
Hedging Activities - Derivative Instruments Fair Value (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Mar. 31, 2017 |
Derivatives Designated for Hedge Accounting | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | $ 57 | $ 156 |
Fair value of derivative, liability | 26 | 0 |
Derivatives Designated for Hedge Accounting | Foreign Exchange Contract | Prepaid Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 16 | 17 |
Fair value of derivative, liability | 0 | 0 |
U.S. Dollar notional amount, asset | 81 | 81 |
Derivatives Designated for Hedge Accounting | Foreign Exchange Contract | Other Noncurrent Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 30 | 32 |
Fair value of derivative, liability | 0 | 0 |
U.S. Dollar notional amount, asset | 162 | 162 |
Derivatives Designated for Hedge Accounting | Cross Currency Swap | Prepaid Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 11 | 17 |
Fair value of derivative, liability | 0 | 0 |
U.S. Dollar notional amount, asset | 174 | 174 |
Derivatives Designated for Hedge Accounting | Cross Currency Swap | Other Noncurrent Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 90 | |
Fair value of derivative, liability | 0 | |
U.S. Dollar notional amount, asset | 2,489 | |
Derivatives Designated for Hedge Accounting | Cross Currency Swap | Other Noncurrent Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 0 | |
Fair value of derivative, liability | 26 | |
U.S. Dollar notional amount, asset | 3,049 | |
Derivatives not Designated for Hedge Accounting | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 1 | 1 |
Fair value of derivative, liability | 4 | 0 |
Derivatives not Designated for Hedge Accounting | Foreign Exchange Contract | Prepaid Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 1 | 1 |
Fair value of derivative, liability | 0 | 0 |
U.S. Dollar notional amount, asset | 139 | 198 |
Derivatives not Designated for Hedge Accounting | Foreign Exchange Contract | Other Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative, asset | 0 | 0 |
Fair value of derivative, liability | 4 | 0 |
U.S. Dollar, notional amount, liability | $ 205 | $ 37 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Mar. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying amount of liabilities | $ 7,949 | $ 8,362 |
Fair malue, measurements, recurring | Fair value, inputs, level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair values of liabilities | 8,400 | 8,700 |
Fair malue, measurements, recurring | Fair value, inputs, level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | $ 443 | $ 478 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ / shares in Units, £ in Millions, shares in Millions, $ in Millions, € in Billions | Jul. 26, 2017$ / shares | Jun. 30, 2017USD ($) | Apr. 30, 2017shares | Mar. 31, 2017USD ($)shares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / shares | Jun. 30, 2017EUR (€)vote | Jun. 30, 2017GBP (£)vote | Jun. 30, 2017USD ($)vote |
Accelerated Share Repurchases [Line Items] | |||||||||
Share of common stock outstanding, vote on proposals | vote | 1 | 1 | 1 | ||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.28 | $ 0.28 | |||||||
Authorized amount available for future repurchases | $ 2,500 | ||||||||
Translation gain (loss) attributable to redeemable noncontrolling interest | $ 115 | $ (67) | |||||||
Reclassified to income statement, net of income tax expense of nil and nil | 20 | ||||||||
Long-term debt outstanding | $ 8,362 | $ 7,949 | |||||||
Net actuarial losses attributable to redeemable noncontrolling interest | 1 | $ 1 | |||||||
Term Loan | Euro Denominated Notes | |||||||||
Accelerated Share Repurchases [Line Items] | |||||||||
Long-term debt outstanding | € | € 1.2 | ||||||||
Term Loan | British Pound Sterling Denominated Notes | |||||||||
Accelerated Share Repurchases [Line Items] | |||||||||
Long-term debt outstanding | £ | £ 450 | ||||||||
Net Investment Hedging | |||||||||
Accelerated Share Repurchases [Line Items] | |||||||||
Losses from net investment hedges recorded in other comprehensive income | $ 114 | ||||||||
Accelerated Share Repurchase | |||||||||
Accelerated Share Repurchases [Line Items] | |||||||||
Common stock repurchased | $ 250 | $ 250 | |||||||
Common stock repurchased (shares) | shares | 0.3 | 1.4 | 1.2 | ||||||
Subsequent Event | |||||||||
Accelerated Share Repurchases [Line Items] | |||||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.34 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Other Comprehensive Income (Loss), Net of Tax (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Net actuarial losses attributable to redeemable noncontrolling interest | $ 1,000,000 | $ 1,000,000 |
Other comprehensive income (loss) before reclassifications | 320,000,000 | |
Reclassified to income statement, net of income tax expense | 1,000,000 | |
Other Comprehensive Income (Loss), Net of Tax | 321,000,000 | (244,000,000) |
Foreign currency translation adjustments arising during period, tax | 0 | 12,000,000 |
Reclassified to income statement, tax | 0 | 0 |
Unrealized gains on cash flow hedges arising during period, tax | 0 | 0 |
Net actuarial loss and prior service cost arising during the period, tax | 0 | 0 |
Amortization of actuarial loss and prior service costs, tax | 0 | 1,000,000 |
Foreign currency translation adjustments and other, tax | 0 | 0 |
Foreign Currency Translation Adjustments, Net of Tax | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 382,000,000 | (275,000,000) |
Reclassified to income statement, net of income tax expense | 0 | 20,000,000 |
Other Comprehensive Income (Loss), Net of Tax | 382,000,000 | (255,000,000) |
Unrealized Losses on Net Investment Hedges, Net of Tax | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | (70,000,000) | 0 |
Reclassified to income statement, net of income tax expense | 0 | 0 |
Other Comprehensive Income (Loss), Net of Tax | (70,000,000) | 0 |
Unrealized gains (losses) on net investment hedges arising during period, tax | 44,000,000 | 0 |
Reclassified to income statement, tax | 0 | 0 |
Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 14,000,000 | |
Reclassified to income statement, net of income tax expense | 0 | |
Other Comprehensive Income (Loss), Net of Tax | 14,000,000 | 0 |
Accumulated Defined Benefit Plans Adjustment, Net Prior Service and Net Gain (Loss) Including Portion Attributable to Noncontrolling Interest | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Accumulated Defined Benefit Plans Adjustment, Amortization of Actuarial Loss, Prior Service Cost and Transition Obligation, Including Portion Attributable to Noncontrolling Interest | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 1,000,000 | 3,000,000 |
Accumulated Defined Benefit Plans, Foreign Currency Adjustment Including Portion Attributable to Noncontrolling Interest | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive income (loss) before reclassifications | (6,000,000) | 8,000,000 |
Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other Comprehensive Income (Loss), Net of Tax | $ (5,000,000) | $ 11,000,000 |
Stockholders' Equity - Schedu53
Stockholders' Equity - Schedule of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 11,273 | |
Other comprehensive income (loss) before reclassifications | 320 | |
Amounts reclassified to earnings and other | 1 | |
Other Comprehensive Income (Loss), Net of Tax | 321 | $ (244) |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 116 | |
Other comprehensive income (loss) attributable to McKesson | 205 | |
Ending balance | 11,513 | |
Foreign Currency Translation Adjustments, Net of Tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (1,873) | |
Other comprehensive income (loss) before reclassifications | 382 | (275) |
Amounts reclassified to earnings and other | 0 | 20 |
Other Comprehensive Income (Loss), Net of Tax | 382 | (255) |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 115 | |
Other comprehensive income (loss) attributable to McKesson | 267 | |
Ending balance | (1,606) | |
Unrealized Losses on Net Investment Hedges, Net of Tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (8) | |
Other comprehensive income (loss) before reclassifications | (70) | 0 |
Amounts reclassified to earnings and other | 0 | 0 |
Other Comprehensive Income (Loss), Net of Tax | (70) | 0 |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 0 | |
Other comprehensive income (loss) attributable to McKesson | (70) | |
Ending balance | (78) | |
Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (31) | |
Other comprehensive income (loss) before reclassifications | 14 | |
Amounts reclassified to earnings and other | 0 | |
Other Comprehensive Income (Loss), Net of Tax | 14 | $ 0 |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 0 | |
Other comprehensive income (loss) attributable to McKesson | 14 | |
Ending balance | (17) | |
Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (229) | |
Other comprehensive income (loss) before reclassifications | (6) | |
Amounts reclassified to earnings and other | 1 | |
Other Comprehensive Income (Loss), Net of Tax | (5) | |
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | 1 | |
Other comprehensive income (loss) attributable to McKesson | (6) | |
Ending balance | (235) | |
Total Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (2,141) | |
Ending balance | $ (1,936) |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | ||
Jun. 30, 2017USD ($)segment | Mar. 31, 2017USD ($) | Jun. 30, 2016USD ($) | |
Segment Reporting [Abstract] | |||
Number of operating segments | segment | 2 | ||
Revenues | |||
Total Revenues | $ 51,051 | $ 49,733 | |
Operating profit | |||
Total | 633 | 972 | |
Interest Expense | (68) | (79) | |
Income from Continuing Operations Before Income Taxes | 458 | 912 | |
Loss from equity method investment in Change Healthcare | 120 | 0 | |
Gain from sale of business, pre-tax | 37 | 0 | |
Operating Segments | |||
Revenues | |||
Total Revenues | 51,051 | 49,733 | |
Operating profit | |||
Total | 635 | 1,096 | |
Operating Segments | Total Distribution Solutions | |||
Revenues | |||
Total Revenues | 50,931 | 49,009 | |
Operating profit | |||
Total | $ 713 | $ 928 | |
Revenue derived from services, percentage (less than) | 2.00% | 2.00% | |
Proceeds from legal settlements | $ 142 | ||
Operating Segments | Total Distribution Solutions | LIFO Method of Accounting | |||
Operating profit | |||
Total | $ 26 | 47 | |
Operating Segments | Total Distribution Solutions | Reportable Subsegments | North America pharmaceutical distribution and services | |||
Revenues | |||
Total Revenues | 43,016 | 41,211 | |
Operating Segments | Total Distribution Solutions | Reportable Subsegments | International pharmaceutical distribution and services | |||
Revenues | |||
Total Revenues | 6,382 | 6,330 | |
Operating Segments | Total Distribution Solutions | Reportable Subsegments | Medical-Surgical distribution and services | |||
Revenues | |||
Total Revenues | 1,533 | 1,468 | |
Operating Segments | Technology Solutions | |||
Revenues | |||
Total Revenues | 120 | 724 | |
Operating profit | |||
Total | (78) | 168 | |
Corporate | |||
Operating profit | |||
Corporate Expenses, Net | (109) | (105) | |
Segment Reconciling Items | |||
Operating profit | |||
Interest Expense | (68) | $ (79) | |
Joint Venture | Change Healthcare, LLC (“Change Healthcare”) | |||
Operating profit | |||
Loss from equity method investment in Change Healthcare | 120 | ||
Core MTS Businesses | Change Healthcare, LLC (“Change Healthcare”) | Operating Segments | Technology Solutions | |||
Operating profit | |||
Gain from sale of business, pre-tax | $ 37 | $ 3,947 |