XML 51 R36.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Segments of Business | 12 Months Ended
--- | ---
Mar. 31, 2018
Segment Reporting [Abstract] |
Segments of Business | Segments of Business We report our operations in two reportable segments for 2018, 2017 and 2016: 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 using a number of measures, including operating profit before interest expense, income taxes and results from discontinued operations. Our Distribution Solutions segment distributes brand, generic, specialty, biosimilar and OTC pharmaceutical drugs and other healthcare-related products internationally and provides practice management, technology, clinical support and business solutions to community-based oncology and other specialty practices. This segment also provides specialty pharmaceutical solutions for pharmaceutical manufacturers including offering multiple distribution channels and clinical trial access to our network of oncology physicians. It also provides medical-surgical supply distribution, logistics and other services to healthcare providers within the United States. Additionally, this segment operates retail pharmacy chains in Europe and Canada, and supports independent pharmacy networks within North America and Europe. It also supplies integrated pharmacy management systems, automated dispensing systems and related services to retail, outpatient, central fill, specialty and mail order pharmacies. Prior to March 2017, our McKesson Technology Solutions (“MTS”) segment delivered enterprise-wide clinical, patient care, financial, supply chain, strategic management software solutions, as well as connectivity, outsourcing and other services, including remote hosting and managed services, to healthcare organizations. On March 1, 2017, upon the closing of Healthcare Technology Net Asset Exchange, we contributed the majority of our MTS businesses to the newly formed joint venture, Change Healthcare. We retained our RHP and EIS businesses. Effective April 1, 2017, our RHP business was transitioned to the Distributions Solution segment. The EIS business was sold to a third party during 2018. Accordingly, the MTS segment only included our equity method investment in Change Healthcare at the end of 2018. Refer to Financial Note 2, “Healthcare Technology Net Asset Exchange” and Financial Note 5, “Divestitures,” for additional information about Change Healthcare and the sale of our EIS business. Corporate includes expenses associated with Corporate functions and projects, and the results of certain investments. Corporate expenses are allocated to operating segments to the extent that these items are directly attributable. Financial information relating to our reportable segments and reconciliations to the consolidated totals is as follows:
| Years Ended March 31,
(In millions) | 2018 |  | 2017 |  | 2016
Revenues |  |  |  |  |
Distribution Solutions (1) |  |  |  |  |
North America pharmaceutical distribution and services | $ | 174,186 |  |  | $ | 164,832 |  |  | $ | 158,469 |
International pharmaceutical distribution and services | 27,320 |  |  | 24,847 |  |  | 23,497 |
Medical-Surgical distribution and services | 6,611 |  |  | 6,244 |  |  | 6,033 |
Total Distribution Solutions | 208,117 |  |  | 195,923 |  |  | 187,999 |
Technology Solutions - products and services | 240 |  |  | 2,610 |  |  | 2,885 |
Total Revenues | $ | 208,357 |  |  | $ | 198,533 |  |  | $ | 190,884 |
Operating profit |  |  |  |  |
Distribution Solutions (2) (3) | $ | 1,231 |  |  | $ | 3,361 |  |  | $ | 3,553 |
Technology Solutions (4) | (23 | ) |  | $ | 4,215 |  |  | $ | 519 |
Total | 1,208 |  |  | 7,576 |  |  | 4,072 |
Corporate Expenses, Net (5) | (564 | ) |  | $ | (377 | ) |  | $ | (469 | )
Loss on Debt Extinguishment | (122 | ) |  | — |  |  | $ | — |
Interest Expense | (283 | ) |  | $ | (308 | ) |  | $ | (353 | )
Income From Continuing Operations Before Income Taxes | $ | 239 |  |  | $ | 6,891 |  |  | $ | 3,250 |
Depreciation and amortization (6) |  |  |  |  |
Distribution Solutions | $ | 831 |  |  | $ | 735 |  |  | $ | 669 |
Technology Solutions | 9 |  |  | 65 |  |  | 107 |
Corporate | 111 |  |  | 110 |  |  | 109 |
Total | $ | 951 |  |  | $ | 910 |  |  | $ | 885 |
Expenditures for long-lived assets (7) |  |  |  |  |
Distribution Solutions | $ | 306 |  |  | $ | 276 |  |  | $ | 306 |
Technology Solutions | — |  |  | 30 |  |  | 15 |
Corporate | 99 |  |  | 98 |  |  | 167 |
Total | $ | 405 |  |  | $ | 404 |  |  | $ | 488 |
Revenues, net by geographic area (8) |  |  |  |  |
United States | $ | 169,943 |  |  | $ | 164,428 |  |  | $ | 158,255 |
Foreign | 38,414 |  |  | 34,105 |  |  | 32,629 |
Total | $ | 208,357 |  |  | $ | 198,533 |  |  | $ | 190,884 |
(1) | Revenues derived from services represent less than 2% of this segment’s total revenues.
(2) | Distribution Solutions segment’s operating profit for 2018 includes non-cash pre-tax goodwill impairment charges of $1,283 million for our McKesson Europe reporting unit and $455 million for our Rexall Health reporting unit. This segment’s operating profit for 2018 also includes non-cash pre-tax asset impairment charges of $446 million and pre-tax restructuring charges of $74 million for our McKesson Europe business. Operating profit for 2017 and 2016 includes $144 million and $76 million of net cash proceeds representing our share of net settlements of antitrust class action lawsuits, and for 2016 also includes a pre-tax gain of $52 million recognized from the sale of our ZEE Medical business.
(3) | Distribution Solutions segment’s operating profit for 2018 and 2017 includes pre-tax credits of $99 million and $7 million and for 2016 a pre-tax charge of $244 million related to our LIFO method of accounting for inventories. LIFO credits were higher in 2018 compared to 2017 due to higher net effect of price declines, partially offset by lower inventory level. LIFO expense was recognized in 2016 primarily due to net effects of price increases.
(4) | Technology Solutions segment’s operating profit for 2018 includes a pre-tax gain of $109 million from the 2018 third quarter sale of our EIS business. Operating profit for 2017 includes a pre-tax gain of $3,947 million recognized from the Healthcare Technology Net Asset Exchange, net of transaction and related expenses and a non-cash pre-tax charge of $290 million for goodwill impairment related to the EIS reporting unit. Operating profit for 2016 includes a pre-tax gain of $51 million recognized from the sale of our nurse triage business.
(5) | In 2016, the Company implemented the Cost Alignment Plan to reduce its operating expenses and recorded pre-tax restructuring charges of $229 million. Pre-tax charges for 2016 were recorded as follows: $161 million, $51 million and $17 million within our Distribution Solutions segment, Technology Solutions segment and Corporate.
(6) | Amounts primarily include amortization of acquired intangible assets purchased in connection with business acquisitions, capitalized software held for sale and capitalized software for internal use.
(7) | Long-lived assets consist of property, plant and equipment.
(8) | Net revenues were attributed to geographic areas based on the customers’ shipment locations.
Segment assets and property, plant and equipment, net by geographic areas were as follows:
| March 31,
(In millions) | 2018 |  | 2017
Segment assets |  |  |
Distribution Solutions | $ | 53,915 |  |  | $ | 52,322 |
Technology Solutions | 3,735 |  |  | 4,995 |
Corporate | 2,731 |  |  | 3,652 |
Total | $ | 60,381 |  |  | $ | 60,969 |
Property, plant and equipment, net |  |  |  |  |
United States | $ | 1,529 |  |  | $ | 1,383 |
Foreign | 935 |  |  | 909 |
Total | $ | 2,464 |  |  | $ | 2,292 |
Assets by operating segment are not reviewed by management for the purpose of assessing performance or allocating resources. As previously disclosed in our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2017 and December 31, 2017, the executive who was our segment manager of the Distribution Solutions segment retired from the Company in January 2018. As a result, the Company’s chief operating decision maker (“CODM”) evaluated our management and operating structure. In connection with the completion of this evaluation in the first quarter of 2019, our operating structure is realigned, and we will report our financial results in three reportable segments on a retrospective basis commencing in the first quarter of 2019, as follows:
• | U.S. Pharmaceutical and Specialty Solutions;
• | European Pharmaceutical Solutions; and
• | Medical-Surgical Solutions.
All remaining operating segments and business activities that are not significant enough to require separate reportable segment disclosure will be included in Other. Other will primarily consist of McKesson Canada, McKesson Prescription Technology Solutions and our equity method investment in Change Healthcare. The segment changes reflect how our CODM allocates resources and assesses performance commencing in the first quarter of 2019.

X
- References No definition available. + Details
Name: | us-gaap_SegmentReportingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
Name: | us-gaap_SegmentReportingDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration