Restructuring, Impairment, and Related Charges

9 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

Restructuring, Impairment, and Related Charges

Restructuring, Impairment, and Related ChargesThe Company recorded restructuring, impairment, and related charges of $18 million and $208 million during the three and nine months ended December 31, 2021, respectively, and $155 million and $271 million during the three and nine months ended December 31, 2020, respectively. These charges are included in “Restructuring, impairment, and related charges” in the Condensed Consolidated Statements of Operations. In addition, charges related to restructuring initiatives were included in “Cost of sales” in the Condensed Consolidated Statement of Operations and were not material for the nine months ended December 31, 2020.

Restructuring Initiatives

During the first quarter of 2022, the Company approved an initiative to increase operational efficiencies and flexibility by transitioning to a partial remote work model for certain employees. This initiative primarily includes the rationalization of the Company’s office space in North America. Where it determines to cease using office space, the Company plans to exit the portion of the facility no longer used. It also may retain and repurpose certain other office locations. The Company expects to incur total charges of approximately $140 million to $180 million for this initiative, consisting primarily of exit related costs, accelerated depreciation and amortization of long-lived assets, and asset impairments. The Company recorded charges of $5 million and $115 million, respectively, in the three and nine months ended December 31, 2021. Charges primarily relate to lease right-of-use and other long-lived asset impairments, lease exit costs, and accelerated depreciation and amortization. This initiative is anticipated to be substantially complete in 2022 after which immaterial charges will continue to be incurred through the termination date of certain leases.

During the first quarter of 2021, the Company committed to an initiative within the United Kingdom (“U.K.”), which is included in the Company’s International segment, to further drive operational changes in technologies and business processes, efficiencies, and cost savings. The initiative included reducing the number of retail pharmacy stores, decommissioning obsolete technologies and processes, reorganizing and consolidating certain business operations, and related headcount reductions. Charges incurred for this initiative were not material for the three and nine months ended December 31, 2021 and were $9 million and $50 million for the three and nine months ended December 31, 2020, respectively, primarily related to asset impairments and accelerated depreciation expense as well as employee severance and other employee-related costs. This initiative was substantially complete in the third quarter of 2022, and remaining costs the Company expects to record under this initiative are not material.

Restructuring, impairment, and related charges during the three and nine months ended December 31, 2021 consisted of the following:


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

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


	Nine Months Ended December 31, 2021
(In millions)	U.S. Pharmaceutical (1)		Prescription Technology Solutions (1)		Medical-Surgical Solutions (1)		International (2)		Corporate (1)		Total
Severance and employee-related costs, net	$	2	$	(1)	$	1	$	10	$	2	$	14
Exit and other-related costs (3)	7		2		3		21		33		66
Asset impairments and accelerated depreciation	16		17		5		35		55		128
Total	$	25	$	18	$	9	$	66	$	90	$	208

(1)Costs primarily relate to the transition to the partial remote work model described above.

(2)Primarily represents costs related to optimization programs in Canada as well as the transition to a partial remote work model and the U.K. operating model and cost optimization efforts both described above.

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

Restructuring, impairment, and related charges during the three and nine months ended December 31, 2020 consisted of the following:


	Three Months Ended December 31, 2020
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International (1)		Corporate (2)		Total
Severance and employee-related costs, net	$	3	$	—	$	(3)	$	2	$	7	$	9
Exit and other-related costs (3)	3		—		1		5		6		15
Asset impairments and accelerated depreciation	—		—		—		9		7		16
Total	$	6	$	—	$	(2)	$	16	$	20	$	40

(1)Primarily represents costs associated with the U.K. operating model and cost optimization efforts described above.

(2)Primarily represents costs associated with an operating model and cost optimization initiative and with the relocation of the Company’s corporate headquarters. Both of these initiatives were substantially completed in the year ended March 31, 2021.

(3)Exit and other-related costs primarily include project consulting fees.


	Nine Months Ended December 31, 2020
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International (1)		Corporate (2)		Total
Severance and employee-related costs, net	$	10	$	—	$	—	$	22	$	31	$	63
Exit and other-related costs (3)	8		—		3		12		20		43
Asset impairments and accelerated depreciation	—		—		1		40		9		50
Total	$	18	$	—	$	4	$	74	$	60	$	156

(1)Primarily represents costs associated with the U.K. operating model and cost optimization efforts described above, and an operating model and cost optimization initiative which was substantially completed in the year ended March 31, 2021.

(3)Exit and other-related costs primarily include project consulting fees.

The following table summarizes the activity related to the restructuring liabilities associated with the Company’s restructuring initiatives for the nine months ended December 31, 2021:


(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Balance, March 31, 2021 (1)	$	19	$	4	$	3	$	66	$	59	$	151
Restructuring, impairment, and related charges	25		18		9		66		90		208
Non-cash charges	(16)		(17)		(5)		(35)		(55)		(128)
Cash payments	(15)		(1)		(5)		(22)		(26)		(69)
Other	—		—		—		(11)		(7)		(18)
Balance, December 31, 2021 (2)	$	13	$	4	$	2	$	64	$	61	$	144

(1)As of March 31, 2021, the total reserve balance was $151 million, of which $99 million was recorded in “Other accrued liabilities” and $52 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

(2)As of December 31, 2021, the total reserve balance was $144 million, of which $52 million was recorded in “Other accrued liabilities,” $44 million was recorded in “Liabilities held for sale,” and $48 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

Long-Lived Asset Impairments

During the third quarter of 2021, the Company recognized charges of $115 million to impair certain long-lived assets within the Company’s International segment. These charges primarily related to long-lived assets associated with the Company’s retail pharmacy businesses in Canada and Europe and were due to declines in estimated future cash flows partially driven by a revised outlook regarding the impacts of COVID-19. The Company used both an income approach (a discounted cash flow (“DCF”) method) and a market approach to estimate the fair value of the long-lived assets.

The fair value of the long-lived assets is considered a Level 3 fair value measurement due to the significance of unobservable inputs developed using company specific information. Refer to Financial Note 11, “Fair Value Measurements,” for more information on nonrecurring fair value measurements.