StockSelector.com
  Research, Select, & Monitor Saturday, September 22, 2018 8:12:22 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
McKesson Corp.$134.95($.90)(.66%)

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 McKesson Reports Fiscal 2018 Third-Quarter Results
   Thursday, February 01, 2018 7:00:45 AM ET

--Third-quarter GAAP earnings per diluted share from continuing operations of $4.32, up 51% year-over-year. GAAP earnings per diluted share included a net tax benefit of approximately $370 million, or $1.78, related to the Tax Cuts and Jobs Act of 2017.

--Third-quarter Adjusted Earnings per diluted share of $3.41, up 12% year-over-year, compared to $3.04 in the prior year.

--Fiscal 2018 Outlook: GAAP earnings per diluted share from continuing operations of $7.65 to $9.00.

--Fiscal 2018 Outlook: Adjusted Earnings of $12.50 to $12.80 per diluted share.

McKesson Corporation (MCK ) today reported that revenues for the third quarter ended December 31, 2017, were $53.6 billion, up 7% compared to $50.1 billion a year ago. On the basis of U.S. generally accepted accounting principles ("GAAP"), third-quarter earnings per diluted share from continuing operations was $4.32, compared to $2.86 a year ago. Third-quarter GAAP earnings per diluted share included a net tax benefit of approximately $370 million, or $1.78, driven by the Tax Cuts and Jobs Act of 2017.



Third-quarter Adjusted Earnings per diluted share, which excludes the $1.78 net tax benefit driven by the Tax Cuts and Jobs Act of 2017, was $3.41, up 12% compared to $3.04 a year ago. Third-quarter results were driven by a lower share count, organic growth across multiple business units, including the company’s strategic sourcing benefits through ClarusONE, incremental profit contribution from acquisitions and a lower tax rate, which included discrete tax benefits unrelated to the Tax Cuts and Jobs Act of 2017. These positive drivers were partially offset by lower profit in our Technology Solutions segment driven by the contribution of the majority of the businesses to Change Healthcare and the sale of our Enterprise Information Solutions business, and the impact of reduced reimbursement in the company’s U.K. retail pharmacy business. Prior year third-quarter results included two non-recurring charges totaling approximately $60 million in our Distribution Solutions segment.

"Our third-quarter results reflected operating performance in line with our expectations, complemented by a lower share count and lower tax rate," said John H. Hammergren, chairman and chief executive officer. "As a result of the lower tax rate and share count, we are raising and narrowing our Fiscal 2018 Adjusted Earnings outlook from a range of $11.80 to $12.50 per diluted share to a new range of $12.50 to $12.80 per diluted share."

For the first nine months of the fiscal year, McKesson generated cash from operations of $1.3 billion and ended the quarter with cash and cash equivalents of $2.6 billion. Through the first nine months of the year, McKesson repaid $545 million in long-term debt, paid $2.0 billion for acquisitions, repurchased $900 million of its common stock, invested $392 million internally and paid $192 million in dividends.

"We deployed capital in line with our portfolio approach during the third quarter, announcing the RxCrossroads acquisition and repurchasing shares, providing a return to shareholders while continuing to position McKesson for growth in a rapidly evolving industry," concluded Hammergren.

Segment Results

Distribution Solutions revenues were $53.6 billion for the quarter, up 8% on a reported basis and 7% on a constant currency basis.

North America pharmaceutical distribution and services revenues of $44.9 billion for the quarter were up 8% on a reported basis and 7% on a constant currency basis, primarily reflecting market growth and acquisitions.

International pharmaceutical distribution and services revenues were $7.0 billion for the quarter, up 13% on a reported basis and 4% on a constant currency basis, driven by acquisitions and market growth.

Medical-Surgical distribution and services revenues were $1.7 billion for the quarter, up 9%, primarily driven by market growth.

In the third quarter, Distribution Solutions GAAP operating profit was $819 million and GAAP operating margin was 1.53%. Third-quarter adjusted operating profit was $991 million, up 23% from the prior year on a reported basis and 22% on a constant currency basis. Adjusted operating margin for the Distribution Solutions segment was 1.85% on a constant currency basis. Adjusted operating margin excluding noncontrolling interests for the Distribution Solutions segment was 1.77% on a constant currency basis.

Technology Solutions GAAP operating profit was $65 million for the third quarter, primarily driven by a gain on the sale of the company’s Enterprise Information Solutions business. Third-quarter adjusted operating profit was $53 million, primarily driven by our proportionate share of the income from McKesson’s equity investment in Change Healthcare.

Fiscal Year 2018 Outlook

McKesson expects GAAP earnings per diluted share of $7.65 to $9.00 for the fiscal year ending March 31, 2018, which includes the following items:

-- Amortization of acquisition-related intangibles of $2.35 to $2.65 per diluted share;

-- Acquisition-related expenses and adjustments of $1.00 to $1.20 per diluted share;

-- Last-In-First-Out ("LIFO") inventory-related charges of five cents to credits of five cents per diluted share;

-- Gains from antitrust legal settlements of up to five cents per diluted share;

-- Restructuring charges of $1.25 to $1.45 per diluted share; and

-- Other adjustments resulting in credits of $0.50 to $0.70 per diluted share.

McKesson expects Adjusted Earnings of $12.50 to $12.80 per diluted share for the fiscal year ending March 31, 2018.

Dividend Declaration

The company’s Board of Directors yesterday declared a regular dividend of $0.34 cents per share of common stock. The dividend will be payable on April 2, 2018, to stockholders of record on March 1, 2018.

Adjusted Earnings

McKesson separately reports financial results on the basis of Adjusted Earnings. Adjusted Earnings is a non-GAAP financial measure defined as GAAP income from continuing operations, excluding amortization of acquisition-related intangible assets, acquisition-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring charges, and other adjustments. A reconciliation of McKesson’s GAAP financial results to Adjusted Earnings is provided in Schedules 2, 3 and 4 of the financial statement tables included with this release.

Constant Currency

McKesson also presents its financial results on a constant currency basis. The company conducts business worldwide in local currencies, including the Euro, British pound and Canadian dollar. As a result, the comparability of the financial results reported in U.S. dollars can be affected by changes in foreign currency exchange rates. Constant currency information is presented to provide a framework for assessing how the company’s business performed excluding the effect of foreign currency exchange rate fluctuations. The supplemental constant currency information of the company’s GAAP financial results and Adjusted Earnings (Non-GAAP) is provided in Schedule 3 of the financial statement tables included with this release.

Adjusted Operating Profit Margin Excluding Noncontrolling Interests

McKesson also provides adjusted operating profit margin excluding noncontrolling interests. The company has arrangements involving third-party noncontrolling interests. As a result, pre-tax results are affected by the portion of pre-tax earnings attributable to noncontrolling interests. Adjusted operating profit margin excluding noncontrolling interests information is presented to provide a framework for assessing how the company’s business performed excluding the effect of pre-tax earnings that is not attributable to McKesson. The supplemental adjusted operating profit margin excluding noncontrolling interests information of the company’s GAAP financial results and Adjusted Earnings (Non-GAAP) is provided in Schedule 3 of the financial statement tables included with this release.

Risk Factors

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

Conference Call Details

The company has scheduled a conference call for today, Thursday, February 1st, at 8:00 AM ET. The dial-in number for individuals wishing to participate on the call is 323-794-2093. Craig Mercer, senior vice president, Investor Relations, is the leader of the call, and the password to join the call is ’McKesson’. A telephonic replay of this conference call will be available for five calendar days. The dial-in number for individuals wishing to listen to the replay is 719-457-0820 and the pass code is 3106087. An archive of the conference call will also be available on the company’s Investor Relations website at http://investor.mckesson.com .

Shareholders are encouraged to review the company’s filings with the Securities and Exchange Commission.

About McKesson Corporation

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

 
                                                                                                                                                                                                                                     Schedule 1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                                                                                                                    McKESSON CORPORATION
                                                                                                                                                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
                                                                                                                                                                         (unaudited)
                                                                                                                                                           (in millions, except per share amounts)
 
                                                                                             Quarter Ended December 31,                                                                    Nine Months Ended December 31,                            
                                                                                     ---------------------------------------------------------------------------------                                                    -----------------------------------------------------------------------------------
                                                                                                  2017                            2016                                    Change                                    2017                             2016                                             Change
                                                                                     ------------------------------                     ------------------------------                     ----------                     -------------------------------                     -------------------------------                     ---------------------------
                                                                                                                                                                                                                                                                                                                                         
Revenues                                                                                                $   53,617                                         $   50,130                          7   %                                         $   156,729                                         $   149,820                          5                    %
Cost of sales (1)                                                                      (50,902)                        (47,318)                          8                            (148,620)                        (141,345)                          5
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
    Gross profit                                                                                             2,715                                              2,812                        (3)                                                   8,109                                               8,475                        (4)
                                                                                                                                                                                                                                                                                                                                         
Operating expenses (2)                                                                                     (1,984)                                            (1,981)                          -                                                 (5,920)                                             (5,802)                          2
Gain from sale of business (3)                                                                                 109                                                  -                          -                                                     109                                                   -                          -
Goodwill impairment charges (4)                                                                                  -                                                  -                          -                                                   (350)                                               (290)                         21
Restructuring and asset impairment charges (5)                                              (6)                               -                          -                                (242)                                -                          -
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
    Total operating expenses                                                            (1,881)                         (1,981)                        (5)                              (6,403)                          (6,092)                          5
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
    Operating income                                                                                           834                                                831                          -                                                   1,706                                               2,383                       (28)
Other income, net (6)                                                                                           20                                                 23                       (13)                                                     102                                                  65                         57
Loss from equity method investment in Change Healthcare (7)                                                   (90)                                                  -                          -                                                   (271)                                                   -                          -
Interest expense                                                                           (67)                            (74)                        (9)                                (204)                            (231)                       (12)
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
    Income from continuing operations before income taxes                                                      697                                                780                       (11)                                1,333                                               2,217                       (40)
Income tax benefit (expense) (8) (9)                                                        263                           (131)                      (301)                                   46                            (570)                      (108)
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
    Income from continuing operations after tax                                                                960                                                649                         48                                                   1,379                                               1,647                       (16)
    Income (Loss) from discontinued operations, net of tax (10)                                                  1                             (3)                      (133)                                    3                            (117)                      (103)
                                                                                                          --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
        Net income                                                                                             961                                                646                         49                                                   1,382                                               1,530                       (10)
    Net income attributable to noncontrolling interests                                    (58)                            (13)                        346                                (169)                             (48)                        252
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
Net income attributable to McKesson Corporation                                                         $      903                                         $      633                         43   %                                         $     1,213                                         $     1,482                       (18)                    %
                                                                                     ==================== ========                      ==================== ========                                                     ==================== =========                      ==================== =========
                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                         
Earnings (loss) per common share attributable to
McKesson Corporation (11)
    Diluted
        Continuing operations                                                                           $     4.32                                         $     2.86                         51   %                                         $      5.75                                         $      7.07                       (19)                    %
        Discontinued operations                                                            0.01                          (0.01)                      (200)                                 0.01                           (0.51)                      (102)
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
            Total                                                                                       $     4.33                                         $     2.85                         52   %                                         $      5.76                                         $      6.56                       (12)                    %
                                                                                     ==================== ========                      ==================== ========                                                     ==================== =========                      ==================== =========
                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                         
    Basic
        Continuing operations                                                                           $     4.34                                         $     2.89                         50   %                                         $      5.78                                         $      7.14                       (19)                    %
        Discontinued operations                                                            0.01                          (0.02)                      (150)                                 0.02                           (0.52)                      (104)
                                                                                     -------------------- --------                      -------------------- --------                                                     -------------------- ---------                      -------------------- ---------
            Total                                                                                       $     4.35                                         $     2.87                         52   %                                         $      5.80                                         $      6.62                       (12)                    %
                                                                                     ==================== ========                      ==================== ========                                                     ==================== =========                      ==================== =========
                                                                                                                                                                                                                                                                                                                                         
Dividends declared per common share                                                                     $     0.34                                         $     0.28                                                                        $      0.96                                         $      0.84
                                                                                     ==================== ========                      ==================== ========                                                     ==================== =========                      ==================== =========
                                                                                                                                                                                                                                                                                                                                         
Weighted average common shares
    Diluted                                                                                                    208                                                222                        (6)   %                                                 210                                                 226                        (7)                    %
    Basic                                                                                                      207                                                221                        (6)                                                     209                                                 224                        (7)
(1)    The third quarters of fiscal 2018 and 2017 include pre-tax credits
                          of $2 million and $155 million, and the first nine months of fiscal
                          2018 and 2017 include pre-tax credits of $5 million and $151 million
                          related to our last-in-first-out ("LIFO") method of accounting for
                          inventories. The third quarter and first nine months of fiscal 2017
                          include $2 million and $144 million of net cash proceeds
                          representing our share of antitrust legal settlements. These credits
                          are included within our Distribution Solutions segment.
(2)                       The third quarter and the first nine months of fiscal 2018 include a
                          pre-tax credit of $46 million ($30 million after-tax) representing a
                          reduction in our tax receivable agreement ("TRA") liability within
                          our Technology Solutions segment as a result of the enactment of the
                          2017 Tax Cuts and Jobs Act (the "2017 Tax Act"). The first nine
                          months of fiscal 2018 include a pre-tax gain of $37 million ($22
                          million after-tax) related to the final net working capital and
                          other adjustments from the fiscal 2017 fourth quarter Healthcare
                          Technology Net Asset Exchange within our Technology Solutions
                          segment.
(3)                       Fiscal 2018 includes a pre-tax gain of $109 million ($30 million
                          after-tax) recognized from the fiscal 2018 third quarter sale of our
                          Enterprise Information Solutions ("EIS") business within the
                          Technology Solutions segment.
(4)                       The first nine months of fiscal 2018 include a non-cash pre-tax and
                          after-tax goodwill impairment charge of $350 million for our
                          McKesson Europe reporting unit within the Distribution Solutions
                          segment. There were no tax benefits associated with this goodwill
                          impairment charge. The first nine months of fiscal 2017 include a
                          non-cash pre-tax goodwill impairment charge of $290 million ($282
                          million after-tax) for our EIS reporting unit within the Technology
                          Solutions segment.
(5)                       The third quarter and the first nine months of fiscal 2018 include
                          a pre-tax restructuring charge of $6 million ($5 million
                          after-tax) and $53 million ($45 million after-tax) primarily
                          representing employee severance and lease exit costs. The first
                          nine months of fiscal 2018 include a non-cash pre-tax
                          restructuring charge of $189 million ($157 million after-tax) to
                          impair the carrying value of certain intangible assets and other
                          assets primarily related to our retail business in the United
                          Kingdom ("U.K.") within our Distribution Solutions segment.
(6)                       The first nine months of fiscal 2018 include a pre-tax gain of $43
                          million ($26 million after-tax) recognized from the fiscal 2018
                          second quarter sale of an equity method investment within our
                          Distribution Solutions segment.
(7)                       Our investment in Change Healthcare is accounted for using the
                          equity method of accounting. The amount represents our proportionate
                          share of the net income or loss of the joint venture.
(8)                       The third quarter and first nine months of fiscal 2018 include a
                          provisional net discrete tax benefit of $370 million realized in
                          connection with the December 2017 enactment of the 2017 Tax Act.
                          The third quarter and first nine months of fiscal 2018 also
                          include other net discrete tax benefits of $54 million and $50
                          million.
(9)                       The first nine months of fiscal 2017 include a tax benefit of $47
                          million related to the adoption of the amended accounting guidance
                          on share-based compensation in the first quarter of fiscal 2017.
(10)                      The first nine months of fiscal 2017 include an after-tax loss of
                          $113 million recognized from the fiscal 2017 first quarter sale of
                          our Brazilian pharmaceutical distribution business within our
                          discontinued operations.
(11)                      Certain computations may reflect rounding adjustments.
 
                                                                                                                                                                                                                                     Schedule 2A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                                                                                                                                                                                     McKESSON CORPORATION
                                                                                                                                                                                                                                     RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
                                                                                                                                                                                                                                     (NON-GAAP)
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     (in millions, except per share amounts)
 
                                                                                                                                                                                                                                                                                                                       Change
                                                                                                                                                                                                                                                                                                             Quarter Ended December 31, 2017                                                                                                                                                                                                                                                                                     Vs. Prior Quarter
                                                                        ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------
                                                                                           As Reported                                       Amortization                                     Acquisition-                                          LIFO                                          Gains from                                     Restructuring                                         Other                                           Adjusted                                              As                 Adjusted
                                                                                             (GAAP)                                                            of Acquisition-                                                         Related                                                            Inventory-                                                           Antitrust                                                        Charges, Net                                                         Adjustments,                                                           Earnings                                           Reported                                 Earnings
                                                                                                                                                                   Related                                                            Expenses                                                              Related                                                              Legal                                                                                                                                    Net                                                              (Non-GAAP)                                           (GAAP)                                 (Non-GAAP)
                                                                                                                                                                 Intangibles                                                             and                                                              Adjustments                                                         Settlements
                                                                                                                                                                                                                                     Adjustments
                                                                        ----------------------------------------------   -------------------- ---------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- -------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- ----------------------------------------------                        --------                        --------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                  
Gross profit                                                                               $  2,715                                                              $     -                                                              $    6                                                              $    (2 )                                                            $   -                                                              $   (1 )                                                            $     -                                                              $  2,718                                             (3 )  %                         2     %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Operating expenses (1) (2) (3)                                                             $ (1,881 )                                                            $   123                                                              $   24                                                              $     -                                                              $   -                                                              $   33                                                              $  (157 )                                                            $ (1,858 )                                           (5 )  %                         3     %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Other income, net                                                                          $     20                                                              $     -                                                              $    1                                                              $     -                                                              $   -                                                              $    -                                                              $     1                                                              $     22                                            (13 )  %                       (15 )   %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income (Loss) from equity method investment in                                             $    (90 )                                                            $    70                                                              $   63                                                              $     -                                                              $   -                                                              $    -                                                              $    12                                                              $     55                                              -    %                         -     %
Change Healthcare (4)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income from continuing operations before                                                   $    697                                                              $   193                                                              $   94                                                              $    (2 )                                                            $   -                                                              $   32                                                              $  (144 )                                                            $    870                                            (11 )  %                         8     %
income taxes
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income tax benefit (expense) (5)                                                           $    263                                                              $   (53 )                                                            $  (27 )                                                            $     1                                                              $   -                                                              $   (4 )                                                            $  (280 )                                                            $   (100 )                                         (301 )  %                       (12 )   %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income from continuing operations, net of tax,                                             $    902                                                              $   140                                                              $   67                                                              $    (1 )                                                            $   -                                                              $   28                                                              $  (424 )                                                            $    712                                             42    %                         5     %
attributable to McKesson Corporation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Diluted earnings per common share from                                                     $   4.32                        $  0.67                        $ 0.32                        $ (0.01 )                                         $   -                        $ 0.14                        $ (2.03 )                                         $   3.41 (7)                                         51    %                        12     %
continuing operations, net of tax, attributable to
McKesson Corporation (6)
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
Diluted weighted average common shares                                       208         208        208         208         -        208         208          208                          (6 )  %                        (6 )   %
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
 
 
                                                                                                                                                                                                                                                                                                             Quarter Ended December 31, 2016
                                                                        ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           As Reported                                       Amortization                                     Acquisition-                                          LIFO                                          Gains from                                     Restructuring                                         Other                                           Adjusted
                                                                                             (GAAP)                                                            of Acquisition-                                                         Related                                                            Inventory-                                                           Antitrust                                                        Charges, Net                                                         Adjustments,                                                           Earnings
                                                                                                                                                                   Related                                                            Expenses                                                              Related                                                              Legal                                                                                                                                    Net                                                              (Non-GAAP)
                                                                                                                                                                 Intangibles                                                             and                                                              Adjustments                                                         Settlements
                                                                                                                                                                                                                                     Adjustments
                                                                        ----------------------------------------------   -------------------- ---------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- -------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- ----------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Gross profit                                                                               $  2,812                                                              $     -                                                              $    -                                                              $  (155 )                                                            $  (2 )                                                            $   (1 )                                                            $     -                                                              $  2,654
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Operating expenses                                                                         $ (1,981 )                                                            $   102                                                              $   72                                                              $     -                                                              $   -                                                              $    3                                                              $     -                                                              $ (1,804 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Other income, net                                                                          $     23                                                              $     -                                                              $    3                                                              $     -                                                              $   -                                                              $    -                                                              $     -                                                              $     26
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income from continuing operations before                                                   $    780                                                              $   102                                                              $   75                                                              $  (155 )                                                            $  (2 )                                                            $    2                                                              $     -                                                              $    802
income taxes
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income tax expense                                                                         $   (131 )                                                            $   (31 )                                                            $  (14 )                                                            $    61                                                              $   1                                                              $    -                                                              $     -                                                              $   (114 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income from continuing operations, net of tax,                                             $    636                                                              $    71                                                              $   61                                                              $   (94 )                                                            $  (1 )                                                            $    2                                                              $     -                                                              $    675
attributable to McKesson Corporation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Diluted earnings per common share from                                                     $   2.86                        $  0.32                        $ 0.27                        $ (0.42 )                                         $   -                        $ 0.01                        $     -                        $   3.04  
continuing operations, net of tax, attributable to
McKesson Corporation (6)
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
Diluted weighted average common shares                                       222         222        222         222         -        222           -          222  
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
(1)                                                        Fiscal 2018, as reported under GAAP, includes a pre-tax
                                                                              restructuring charge of $6 million ($5 million after-tax) within our
                                                                              Distribution Solutions segment.
(2)                                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax credit of
                                                                              $46 million ($30 million after-tax) representing a reduction in our
                                                                              TRA liability within our Technology Solutions segment as a result of
                                                                              the enactment of the 2017 Tax Act.
(3)                                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $109
                                                                              million ($30 million after-tax) recognized from the fiscal 2018
                                                                              third quarter sale of our EIS business within the Technology
                                                                              Solutions segment.
(4)                                                                           The amount represents our proportionate share of the net income or
                                                                              loss of the Change Healthcare joint venture. The amortization of
                                                                              equity investment intangibles and other acquired intangibles of $70
                                                                              million is included in our proportionate share of the income (loss)
                                                                              from this equity method investment.
(5)                                                                           Fiscal 2018, as reported under GAAP, includes a provisional net
                                                                              discrete tax benefit of $370 million related to the 2017 Tax Act.
                                                                              Fiscal 2018 also includes other net discrete tax benefits of $54
                                                                              million.
(6)                                                                           Certain computations may reflect rounding adjustments.
(7)                                                                           Adjusted Earnings per share on a Constant Currency basis for the
                                                                              third quarter of fiscal 2018 was $3.39 per diluted share, which
                                                                              excludes the foreign currency exchange effect of $0.02 per diluted
                                                                              share.
                                                                               
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled "Supplemental Non-GAAP Financial Information" of this
release.
 
                                                                                                                                                                                                                                     Schedule 2B
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                                                                                                                                                                                     McKESSON CORPORATION
                                                                                                                                                                                                                                     RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
                                                                                                                                                                                                                                     (NON-GAAP)
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     (in millions, except per share amounts)
 
                                                                                                                                                                                                                                                                                                                                 Change
                                                                                                                                                                                                                                                                                                             Nine Months Ended December 31, 2017                                                                                                                                                                                                                                                                                               Vs. Prior Period
                                                                        ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------
                                                                                               As                                            Amortization                                     Acquisition-                                          LIFO                                           Gains from                                      Restructuring                                         Other                                           Adjusted                                                        As                           Adjusted
                                                                                            Reported                                                                 of                                                                Related                                                            Inventory-                                                            Antitrust                                                         Charges, Net                                                         Adjustments,                                                           Earnings                                                     Reported                                           Earnings
                                                                                             (GAAP)                                                              Acquisition                                                          Expenses                                                              Related                                                               Legal                                                                                                                                     Net                                                                 (Non-                                                       (GAAP)                                              (Non-
                                                                                                                                                                  -Related                                                               and                                                              Adjustments                                                          Settlements                                                                                                                                                                                                      GAAP)                                                                                                           GAAP)
                                                                                                                                                                 Intangibles                                                         Adjustments
                                                                        ----------------------------------------------   -------------------- ---------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- ---------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- ----------------------------------------------                        ---------------------------                         -------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                    
Gross profit                                                                               $  8,109                                                              $     -                                                              $   12                                                              $    (5 )                                                            $     -                                                              $   (1 )                                                            $     -                                                              $  8,115                                                                 (4 )  %                        (1 )  %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating expenses (1) (2) (3) (4)                                                         $ (6,403 )                                                            $   369                                                              $   19                                                              $     -                                                              $     -                                                              $  293                                                              $   182                                                              $ (5,540 )                                                                5    %                         4    %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Other income, net (5)                                                                      $    102                                                              $     1                                                              $    1                                                              $     -                                                              $     -                                                              $    -                                                              $   (42 )                                                            $     62                                                                 57    %                       (16 )  %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income (Loss) from equity method investment in                                             $   (271 )                                                            $   214                                                              $  245                                                              $     -                                                              $     -                                                              $    -                                                              $    12                                                              $    200                                                                  -    %                         -    %
Change Healthcare (6)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income from continuing operations before                                                   $  1,333                                                              $   584                                                              $  277                                                              $    (5 )                                                            $     -                                                              $  292                                                              $   152                                                              $  2,633                                                                (40 )  %                        (3 )  %
income taxes
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income tax benefit (expense) (7)                                                           $     46                                                              $  (183 )                                                            $  (90 )                                                            $     2                                                              $     -                                                              $  (56 )                                                            $  (259 )                                                            $   (540 )                                                             (108 )  %                       (10 )  %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income from continuing operations, net of tax,                                             $  1,210                                                              $   401                                                              $  187                                                              $    (3 )                                                            $     -                                                              $  236                                                              $  (107 )                                                            $  1,924                                                                (24 )  %                        (7 )  %
attributable to McKesson Corporation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Diluted earnings per common share from                                                     $   5.75                        $  1.90                        $ 0.89                        $ (0.01 )                                         $     -                        $ 1.12                        $ (0.51 )                                         $   9.14 (9)                                         (19 )  %                         -    %
continuing operations, net of tax, attributable to
McKesson Corporation (8)
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
Diluted weighted average common shares                                       210         210        210         210           -        210         210          210                                              (7 )  %                        (7 )  %
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
 
 
                                                                                                                                                                                                                                                                                                             Nine Months Ended December 31, 2016
                                                                        ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           As Reported                                       Amortization                                     Acquisition-                                          LIFO                                           Gains from                                      Restructuring                                         Other                                           Adjusted
                                                                                             (GAAP)                                                            of Acquisition-                                                         Related                                                            Inventory-                                                            Antitrust                                                         Charges, Net                                                         Adjustments,                                                           Earnings
                                                                                                                                                                   Related                                                          Expenses and                                                            Related                                                               Legal                                                                                                                                     Net                                                              (Non-GAAP)
                                                                                                                                                                 Intangibles                                                         Adjustments                                                          Adjustments                                                          Settlements
                                                                        ----------------------------------------------   -------------------- ---------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- ---------------------------------------------   -------------------- --------------------------------------------   -------------------- ---------------------------------------------   -------------------- ----------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Gross profit (10)                                                                          $  8,475                                                              $     3                                                              $    1                                                              $  (151 )                                                            $  (144 )                                                            $   (2 )                                                            $     -                                                              $  8,182
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Operating expenses (11)                                                                    $ (6,092 )                                                            $   328                                                              $  157                                                              $     -                                                              $     -                                                              $   16                                                              $   284                                                              $ (5,307 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Other income, net                                                                          $     65                                                              $     1                                                              $    8                                                              $     -                                                              $     -                                                              $    -                                                              $     -                                                              $     74
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income from continuing operations before                                                   $  2,217                                                              $   332                                                              $  166                                                              $  (151 )                                                            $  (144 )                                                            $   14                                                              $   284                                                              $  2,718
income taxes
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income tax expense (12)                                                                    $   (570 )                                                            $  (100 )                                                            $  (37 )                                                            $    59                                                              $    56                                                              $   (5 )                                                            $    (6 )                                                            $   (603 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income from continuing operations, net of tax,                                             $  1,599                                                              $   232                                                              $  129                                                              $   (92 )                                                            $   (88 )                                                            $    9                                                              $   278                                                              $  2,067
attributable to McKesson Corporation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Diluted earnings per common share from                                                     $   7.07                        $  1.02                        $ 0.57                        $ (0.40 )                                         $ (0.39 )                                         $ 0.04                        $  1.23                        $   9.14  
continuing operations, net of tax, attributable to
McKesson Corporation (8)
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
Diluted weighted average common shares                                       226         226        226         226         226        226         226          226  
                                                                        -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
(1)                                                        Fiscal 2018, as reported under GAAP, includes a pre-tax credit of
                                                                              $46 million ($30 million after-tax) representing a reduction in our
                                                                              TRA liability within our Technology Solutions segment as a result of
                                                                              the enactment of the 2017 Tax Act. Fiscal 2018, as reported under
                                                                              GAAP, includes a pre-tax gain of $37 million ($22 million after-tax)
                                                                              recognized in the first quarter of fiscal 2018 related to the final
                                                                              net working capital and other adjustments from the fiscal 2017
                                                                              fourth quarter Healthcare Technology Net Asset Exchange within our
                                                                              Technology Solutions segment.
(2)                                                                           Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
                                                                              restructuring charge of $189 million ($157 million after-tax) to
                                                                              impair the carrying value of certain intangible assets and other
                                                                              assets primarily related to our retail business in the U.K. within
                                                                              our Distribution Solutions segment recognized in the second
                                                                              quarter of fiscal 2018. Fiscal 2018, as reported under GAAP, also
                                                                              includes a pre-tax restructuring charge of $53 million ($45
                                                                              million after-tax) primarily representing employee severance and
                                                                              lease exit costs.
(3)                                                                           Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
                                                                              after-tax goodwill impairment charge of $350 million recognized in
                                                                              the second quarter of fiscal 2018 for our McKesson Europe reporting
                                                                              unit within the Distribution Solutions segment. There were no tax
                                                                              benefits associated with this goodwill impairment charge.
(4)                                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $109
                                                                              million ($30 million after-tax) recognized from the fiscal 2018
                                                                              third quarter sale of our EIS business within the Technology
                                                                              Solutions segment.
(5)                                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
                                                                              million ($26 million after-tax) recognized from the fiscal 2018
                                                                              second quarter sale of an equity method investment within our
                                                                              Distribution Solutions segment.
(6)                                                                           The amount represents our proportionate share of the net income or
                                                                              loss of the Change Healthcare joint venture. The amortization of
                                                                              equity investment intangibles and other acquired intangibles of $214
                                                                              million is included in our proportionate share of the income (loss)
                                                                              from this equity method investment.
(7)                                                                           Fiscal 2018, as reported under GAAP, includes a provisional net
                                                                              discrete tax benefit of $370 million related to the 2017 Tax Act.
                                                                              Fiscal 2018 also includes other net discrete tax benefits of $50
                                                                              million.
(8)                                                                           Certain computations may reflect rounding adjustments.
(9)                                                                           Adjusted Earnings per share on a Constant Currency basis for fiscal
                                                                              2018 was $9.11 per diluted share, which excludes the foreign
                                                                              currency exchange effect of $0.03 per diluted share.
(10)                                                                          Fiscal 2017, as reported under GAAP, includes $144 million of net
                                                                              cash proceeds primarily received in the first quarter of fiscal 2017
                                                                              representing our share of antitrust legal settlements within our
                                                                              Distribution Solutions segment.
(11)                                                                          Fiscal 2017 includes a non-cash pre-tax goodwill impairment charge
                                                                              of $290 million ($282 million after-tax) recognized in the second
                                                                              quarter of fiscal 2017 for our EIS reporting unit within the
                                                                              Technology Solutions segment.
(12)                                                                          Fiscal 2017 includes a tax benefit of $47 million related to the
                                                                              amended accounting guidance on share-based compensation adopted in
                                                                              the first quarter of fiscal 2017.
                                                                               
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled "Supplemental Non-GAAP Financial Information" of this
release.
 
                                                                                                                                                                                                                                     Schedule 3A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                     McKESSON CORPORATION
                                                                                                                                                                                                                                     RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
                                                                                                                                                                                                                                     EARNINGS (NON-GAAP)
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     (in millions)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                        Quarter Ended December 31, 2017                                                                                                                                                        Quarter Ended December 31, 2016                                                                                                                                  GAAP                                                                                               Non-GAAP                                                                                                                   Change
                                                                                           --------------------------------------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------                     --------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------
                                                                                                               As Reported                             Adjustments                    Adjusted                                                        As Reported                                        Adjustments                                Adjusted                                            Foreign                        Constant                                           Foreign                        Constant                                     As                           Adjusted                        Constant                                Constant
                                                                                                                 (GAAP)                                                                                                     Earnings                                                          (GAAP)                                                                                                                            Earnings                                           Currency                                           Currency                                          Currency                                           Currency                                  Reported                        Earnings                        Currency                                Currency
                                                                                                                                                                                                                           (Non-GAAP)                                                                                                                                                                                          (Non-GAAP)                                           Effects                                                                                              Effects                                                                                      (GAAP)                           (Non-                          (GAAP)                                   (Non-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       GAAP)                                                                   GAAP)
                                                                                           -----------------------------------------------   -------------------- -------------------------  -------------------- ---------------------------                           -----------------------------------------------   -------------------- ---------------------------------------------   -------------------- ------------------------------                        -------------------------  -------------------- -----------------------------                        -------------------------  -------------------- -----------------------------                        ---------                       ---------                       ---------                       -------------------------
REVENUES
Distribution Solutions
                                                                                                              $  44,935                                                              $     -                                         $  44,935                                             $  41,685                                                              $     -                                                              $  41,685                                             $ (133)                                         $  44,802                                            $ (133)                                         $  44,802                             8 %                             8 %                             7 %                             7 %
    North America pharmaceutical distribution & services
                                                                                                                  6,989                                                                    -                                             6,989                                                 6,193                                                                    -                                                                  6,193                                               (530)                                             6,459                                              (530)                                             6,459                            13                              13                               4                               4
    International pharmaceutical distribution & services
                                                                                               1,693           -       1,693                              1,558           -         1,558                                -       1,693                               -       1,693                             9                               9                               9                               9
    Medical-Surgical distribution & services
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------                          -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------                          -------------------- ----- -------------------- -------------------- -------                         -------------------- ----- -------------------- -------------------- -------
            Total Distribution Solutions                                                                         53,617                                                                    -                                            53,617                                                49,436                                                                    -                                                                 49,436                                               (663)                                            52,954                                              (663)                                            52,954                             8                               8                               7                               7
Technology Solutions - Products and Services                                                       -           -           -                                694           -           694                                -           -                               -           -                         (100)                           (100)                           (100)                           (100)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------                          -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------                          -------------------- ----- -------------------- -------------------- -------                         -------------------- ----- -------------------- -------------------- -------
        Revenues                                                                                              $  53,617                        $     -                      $  53,617                                             $  50,130                        $     -                        $  50,130                                             $ (663)                      $  52,954                                            $ (663)                      $  52,954                             7 %                             7 %                             6 %                             6 %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== =======                          ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ==================== =======                          ==================== ===== ==================== ==================== =======                         ==================== ===== ==================== ==================== =======
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
GROSS PROFIT
Distribution Solutions                                                                                        $   2,715                                                              $     3                                         $   2,718                                             $   2,424                                                              $ (158)                                                              $   2,266                                             $  (66)                                         $   2,649                                            $  (65)                                         $   2,653                            12 %                            20 %                             9 %                            17 %
Technology Solutions                                                                               -           -           -                                388           -           388                                -           -                               -           -                         (100)                           (100)                           (100)                           (100)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------                          -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------                          -------------------- ----- -------------------- -------------------- -------                         -------------------- ----- -------------------- -------------------- -------
        Gross profit                                                                                          $   2,715                        $     3                      $   2,718                                             $   2,812                        $ (158)                        $   2,654                                             $  (66)                      $   2,649                                            $  (65)                      $   2,653                           (3) %                             2 %                           (6) %                             - %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== =======                          ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ==================== =======                          ==================== ===== ==================== ==================== =======                         ==================== ===== ==================== ==================== =======
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
OPERATING EXPENSES
Distribution Solutions (1)                                                                                    $ (1,914)                                                              $   167                                         $ (1,747)                                             $ (1,628)                                                              $   147                                                              $ (1,481)                                             $    63                                         $ (1,851)                                            $    56                                         $ (1,691)                            18 %                            18 %                            14 %                            14 %
Technology Solutions (2) (3)                                                                                        155                                                                (157)                                               (2)                                                 (256)                                                                   31                                                                  (225)                                                   -                                               155                                                  -                                               (2)                         (161)                            (99)                           (161)                            (99)
Corporate                                                                                      (122)          13       (109)                               (97)         (1)          (98)                                2       (120)                               1       (108)                            26                              11                              24                              10
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------                          -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------                          -------------------- ----- -------------------- -------------------- -------                         -------------------- ----- -------------------- -------------------- -------
        Operating expenses                                                                                    $ (1,881)                        $    23                      $ (1,858)                                             $ (1,981)                        $   177                        $ (1,804)                                             $    65                      $ (1,816)                                            $    57                      $ (1,801)                           (5) %                             3 %                           (8) %                             - %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== =======                          ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ==================== =======                          ==================== ===== ==================== ==================== =======                         ==================== ===== ==================== ==================== =======
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
OTHER INCOME, NET
Distribution Solutions                                                                                        $      18                                                              $     2                                         $      20                                             $      17                                                              $     3                                                              $      20                                             $     -                                         $      18                                            $     -                                         $      20                             6 %                             - %                             6 %                             - %
Technology Solutions                                                                                                  -                                                                    -                                                 -                                                     -                                                                    -                                                                      -                                                   -                                                 -                                                  -                                                 -                             -                               -                               -                               -
Corporate                                                                                          2           -           2                                  6                              -                                6                              (1)           1                             (1)           1                          (67)                            (67)                            (83)                            (83)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------                          -------------------- ------- --------------------                      -------------------- ----- --------------------                      -------------------- -------                          -------------------- ----- -------------------- -------------------- -------                         -------------------- ----- -------------------- -------------------- -------
        Other income, net                                                                                     $      20                        $     2                      $      22                                             $      23                        $     3                        $      26                                             $   (1)                      $      19                                            $   (1)                      $      21                          (13) %                          (15) %                          (17) %                          (19) %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== =======                          ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ==================== =======                          ==================== ===== ==================== ==================== =======                         ==================== ===== ==================== ==================== =======
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
INCOME (LOSS) FROM EQUITY METHOD INVESTMENT                                                                   $    (90)                        $   145                      $      55                                             $       -                        $     -                        $       -                                             $     -                      $    (90)                                            $     -                      $      55                             - %                             - %                             - %                             - %
IN CHANGE HEALTHCARE - Technology Solutions (4)
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== =======                          ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ==================== =======                          ==================== ===== ==================== ==================== =======                         ==================== ===== ==================== ==================== =======
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
OPERATING PROFIT
Distribution Solutions (1)                                                                                    $     819                                                              $   172                                         $     991                                             $     813                                                              $   (8)                                                              $     805                                             $   (3)                                         $     816                                            $   (9)                                         $     982                             1 %                            23 %                             - %                            22 %
Technology Solutions (2) (3) (4) (6)                                                              65        (12)          53                                132          31           163                                -          65                               -          53                          (51)                            (67)                            (51)                            (67)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------                          -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------                          -------------------- ----- -------------------- -------------------- -------                         -------------------- ----- -------------------- -------------------- -------
        Operating profit                                                                                            884                                                                  160                                             1,044                                                   945                                                                   23                                                                    968                                                 (3)                                               881                                                (9)                                             1,035                           (6)                               8                             (7)                               7
Corporate                                                                                      (120)          13       (107)                               (91)         (1)          (92)                                1       (119)                               -       (107)                            32                              16                              31                              16
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------                          -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------                          -------------------- ----- -------------------- -------------------- -------                         -------------------- ----- -------------------- -------------------- -------
                                                                                                              $     764                        $   173                      $     937                                             $     854                        $    22                        $     876                                             $   (2)                      $     762                                            $   (9)                      $     928                          (11) %                             7 %                          (11) %                             6 %
        Income from continuing operations before interest expense and
        income taxes
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== =======                          ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ==================== =======                          ==================== ===== ==================== ==================== =======                         ==================== ===== ==================== ==================== =======
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
STATISTICS
Operating profit as a % of revenues
    Distribution Solutions                                                                                         1.53 %                                                                                                                 1.85 %                                                1.64 %                                                                                                                                      1.63 %                                                                                                1.54 %                                                                                               1.85 %                        (11) bp                           22 bp                         (10) bp                           22 bp
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Adjusted operating profit excluding noncontrolling interests as a %
of revenues
    Distribution Solutions (5)                                                                                                                                                                                                            1.76 %                                                                                                                                                                                            1.62 %                                                                                                                                                                                                     1.77 %                                                          14 bp                                                           15 bp
(1)                                                          Fiscal 2018, as reported under GAAP, includes a pre-tax
                                                                                restructuring charge of $6 million ($5 million after-tax) within our
                                                                                Distribution Solutions segment.
(2)                                                                             Fiscal 2018, as reported under GAAP, includes a pre-tax credit of
                                                                                $46 million ($30 million after-tax) representing a reduction in our
                                                                                TRA liability within our Technology Solutions segment as a result of
                                                                                the enactment of the 2017 Tax Act.
(3)                                                                             Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $109
                                                                                million ($30 million after-tax) recognized from the sale of our EIS
                                                                                business within the Technology Solutions segment.
(4)                                                                             The amount represents our proportionate share of the net income or
                                                                                loss of the Change Healthcare joint venture.
(5)                                                                             Our Distribution Solutions segment’s noncontrolling interests
                                                                                primarily include the third-party equity interests related to
                                                                                ClarusONE Sourcing Services LLP and Vantage Oncology Holdings, LLC.
(6)                                                                             Operating profit for our Technology Solutions segment for fiscal
                                                                                2018 includes only our gain on sale of our EIS business, as reported
                                                                                under GAAP, and our proportionate share of income (loss) from Change
                                                                                Healthcare. Fiscal 2017 operating profit for this segment also
                                                                                included the core MTS businesses, which were contributed to the
                                                                                Change Healthcare joint venture in the fourth quarter of fiscal 2017.
                                                                                 
For more information relating to the Adjusted Earnings (Non-GAAP),
Constant Currency (Non-GAAP) and Adjusted Operating Profit Margin
Excluding Noncontrolling Interests (Non-GAAP) definitions, refer to
the section entitled "Supplemental Non-GAAP Financial Information"
of this release.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                     Schedule 3B
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                     McKESSON CORPORATION
                                                                                                                                                                                                                                     RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
                                                                                                                                                                                                                                     EARNINGS (NON-GAAP)
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     (in millions)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                              Nine Months Ended December 31, 2017                                                                                                                                                           Nine Months Ended December 31, 2016                                                                                                                                       GAAP                                                                                                                 Non-GAAP                                                                                                                              Change
                                                                                           -------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------
                                                                                                               As Reported                             Adjustments                               Adjusted                                                              As Reported                             Adjustments                               Adjusted                                                    Foreign                                 Constant                                                    Foreign                                 Constant                                           As Reported                       Adjusted                        Constant                                 Constant
                                                                                                                 (GAAP)                                                                                                                Earnings                                                                (GAAP)                                                                                                                Earnings                                                   Currency                                                    Currency                                                   Currency                                                    Currency                                             (GAAP)                          Earnings                        Currency                              Currency (Non-
                                                                                                                                                                                                                                      (Non-GAAP)                                                                                                                                                                                    (Non-GAAP)                                                   Effects                                                                                                                Effects                                                                                                                                        (Non-GAAP)                        (GAAP)                                    GAAP)
                                                                                           -----------------------------------------------   -------------------- -------------------------  -------------------- -----------------------------------------------                        -----------------------------------------------   -------------------- -------------------------  -------------------- -----------------------------------------------                        -------------------------  -------------------- -----------------------------------------------                        -------------------------  -------------------- -----------------------------------------------                        ----------                       ----------                       ---------                       ---------------------------
REVENUES
Distribution Solutions
                                                                                                              $ 131,459                                                              $     -                                         $ 131,459                                                              $ 124,271                                                              $     -                                         $ 124,271                                                              $ (130)                                         $ 131,329                                                              $ (130)                                         $ 131,329                                               6 %                              6 %                              6 %                               6 %
    North America pharmaceutical distribution & services
                                                                                                                 20,144                                                                    -                                            20,144                                                                 18,794                                                                    -                                            18,794                                                                (434)                                            19,710                                                                (434)                                            19,710                                               7                                7                                5                                 5
    International pharmaceutical distribution & services
                                                                                               4,886           -       4,886                            4,657           -       4,657                              -       4,886                              -       4,886                            5                                5                                5                                 5
    Medical-Surgical distribution & services
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------
            Total Distribution Solutions                                                                        156,489                                                                    -                                           156,489                                                                147,722                                                                    -                                           147,722                                                                (564)                                           155,925                                                                (564)                                           155,925                                               6                                6                                6                                 6
Technology Solutions - Products and Services                                                     240           -         240                            2,098           -       2,098                              -         240                              -         240                         (89)                             (89)                             (89)                              (89)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------
        Revenues                                                                                              $ 156,729                        $     -                      $ 156,729                                           $ 149,820                        $     -                      $ 149,820                                           $ (564)                      $ 156,165                                           $ (564)                      $ 156,165                            5 %                              5 %                              4 %                               4 %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
GROSS PROFIT
Distribution Solutions (1)                                                                                    $   7,989                                                              $     5                                         $   7,994                                                              $   7,333                                                              $ (295)                                         $   7,038                                                              $  (39)                                         $   7,950                                                              $  (39)                                         $   7,955                                               9 %                             14 %                              8 %                              13 %
Technology Solutions                                                                             120           1         121                            1,142           2       1,144                              -         120                              -         121                         (89)                             (89)                             (89)                              (89)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------
        Gross profit                                                                                          $   8,109                        $     6                      $   8,115                                           $   8,475                        $ (293)                      $   8,182                                           $  (39)                      $   8,070                                           $  (39)                      $   8,076                          (4) %                            (1) %                            (5) %                             (1) %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
OPERATING EXPENSES
Distribution Solutions (2) (3)                                                                                $ (6,164)                                                              $ 1,032                                         $ (5,132)                                                              $ (4,784)                                                              $   413                                         $ (4,371)                                                              $    58                                         $ (6,106)                                                              $    28                                         $ (5,104)                                              29 %                             17 %                             28 %                              17 %
Technology Solutions (3) (4) (5)                                                                                    104                                                                (194)                                              (90)                                                                (1,017)                                                                  369                                             (648)                                                                    -                                               104                                                                    -                                              (90)                                           (110)                             (86)                            (110)                              (86)
Corporate                                                                                      (343)          25       (318)                            (291)           3       (288)                              2       (341)                              1       (317)                           18                               10                               17                                10
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------
        Operating expenses                                                                                    $ (6,403)                        $   863                      $ (5,540)                                           $ (6,092)                        $   785                      $ (5,307)                                           $    60                      $ (6,343)                                           $    29                      $ (5,511)                            5 %                              4 %                              4 %                               4 %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
OTHER INCOME, NET
Distribution Solutions (6)                                                                                    $      95                                                              $  (40)                                         $      55                                                              $      43                                                              $     9                                         $      52                                                              $     -                                         $      95                                                              $     -                                         $      55                                             121 %                              6 %                            121 %                               6 %
Technology Solutions                                                                                                  1                                                                    -                                                 1                                                                      1                                                                    -                                                 1                                                                    -                                                 1                                                                    -                                                 1                                               -                                -                                -                                 -
Corporate                                                                                          6           -           6                               21           -          21                            (1)           5                            (1)           5                         (71)                             (71)                             (76)                              (76)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------
        Other income, net                                                                                     $     102                        $  (40)                      $      62                                           $      65                        $     9                      $      74                                           $   (1)                      $     101                                           $   (1)                      $      61                           57 %                           (16) %                             55 %                            (18) %
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
INCOME (LOSS) FROM EQUITY METHOD INVESTMENT                                                                   $   (271)                        $   471                      $     200                                           $       -                        $     -                      $       -                                           $     -                      $   (271)                                           $     -                      $     200                           -%                               -%                               -%                                -%
IN CHANGE HEALTHCARE - Technology Solutions (7)
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
OPERATING PROFIT
Distribution Solutions (1) (2) (3) (6)                                                                        $   1,920                                                              $   997                                         $   2,917                                                              $   2,592                                                              $   127                                         $   2,719                                                              $    19                                         $   1,939                                                              $  (11)                                         $   2,906                                            (26) %                              7 %                           (25) %                               7 %
Technology Solutions (3) (4) (5) (7) (9)                                                        (46)         278         232                              126         371         497                              -        (46)                              -         232                        (137)                             (53)                            (137)                              (53)
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------
        Operating profit                                                                                          1,874                                                                1,275                                             3,149                                                                  2,718                                                                  498                                             3,216                                                                   19                                             1,893                                                                 (11)                                             3,138                                            (31)                              (2)                             (30)                               (2)
Corporate                                                                                      (337)          25       (312)                            (270)           3       (267)                              1       (336)                              -       (312)                           25                               17                               24                                17
                                                                                           -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------                      -------------------- ----- -------------------- -------------------- ------- --------------------
                                                                                                              $   1,537                        $ 1,300                      $   2,837                                           $   2,448                        $   501                      $   2,949                                           $    20                      $   1,557                                           $  (11)                      $   2,826                         (37) %                            (4) %                           (36) %                             (4) %
        Income from continuing operations before interest expense and
        income taxes
                                                                                           ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ======= ==================== ==================== ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================                      ==================== ===== ==================== ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
STATISTICS
Operating profit as a % of revenues
    Distribution Solutions                                                                                         1.23 %                                                                                                                 1.86 %                                                                 1.75 %                                                                                                                 1.84 %                                                                                                                 1.24 %                                                                                                                 1.86 %                                          (52) bp                             2 bp                          (51) bp                              2 bp
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
Adjusted operating profit excluding noncontrolling interests as a %
of revenues
    Distribution Solutions (8)                                                                                                                                                                                                            1.78 %                                                                                                                                                                                        1.83 %                                                                                                                                                                                                                                        1.78 %                                                                            (5) bp                                                             (5) bp
(1)                                                          Fiscal 2017, as reported under GAAP, includes $144 million of net
                                                                                cash proceeds primarily received in the first quarter of fiscal 2017
                                                                                representing our share of antitrust legal settlements within our
                                                                                Distribution Solutions segment.
(2)                                                                             Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
                                                                                restructuring charge of $189 million ($157 million after-tax) to
                                                                                impair the carrying value of certain intangible assets and other
                                                                                assets primarily related to our retail business in the U.K. within
                                                                                our Distribution Solutions segment recognized in the second
                                                                                quarter of fiscal 2018. Fiscal 2018, as reported under GAAP, also
                                                                                includes a pre-tax restructuring charge of $53 million ($45
                                                                                million after-tax) primarily representing employee severance and
                                                                                lease exit costs.
(3)                                                                             Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
                                                                                after-tax goodwill impairment charge of $350 million recognized in
                                                                                the second quarter of fiscal 2018 for our McKesson Europe reporting
                                                                                unit within the Distribution Solutions segment. There were no tax
                                                                                benefits associated with this goodwill impairment charge. Fiscal
                                                                                2017, as reported under GAAP, includes a non-cash pre-tax goodwill
                                                                                impairment charge of $290 million ($282 million after-tax)
                                                                                recognized in the second quarter of fiscal 2017 for our EIS
                                                                                reporting unit within the Technology Solutions segment.
(4)                                                                             Fiscal 2018, as reported under GAAP, includes a pre-tax credit of
                                                                                $46 million ($30 million after-tax) recognized in the third quarter
                                                                                of fiscal 2018 representing a reduction in our TRA liability within
                                                                                our Technology Solutions segment as a result of the enactment of the
                                                                                2017 Tax Act. Fiscal 2018, as reported under GAAP, includes a
                                                                                pre-tax gain of $37 million ($22 million after-tax) recognized in
                                                                                the first quarter of fiscal 2018 related to the final net working
                                                                                capital and other adjustments from the fiscal 2017 fourth quarter
                                                                                Healthcare Technology Net Asset Exchange within our Technology
                                                                                Solutions segment.
(5)                                                                             Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $109
                                                                                million ($30 million after-tax) recognized from the fiscal 2018
                                                                                third quarter sale of our EIS reporting unit within the Technology
                                                                                Solutions segment.
(6)                                                                             Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
                                                                                million ($26 million after-tax) recognized from the fiscal 2018
                                                                                second quarter sale of an equity method investment within our
                                                                                Distribution Solutions segment.
(7)                                                                             The amount represents our proportionate share of the net income or
                                                                                loss of the Change Healthcare joint venture.
(8)                                                                             Our Distribution Solutions segment’s noncontrolling interests
                                                                                primarily include the third-party equity interests related to
                                                                                ClarusONE Sourcing Services LLP and Vantage Oncology Holdings, LLC.
(9)                                                                             Operating profit for our Technology Solutions segment for fiscal
                                                                                2018 includes only our EIS business, the gain on sale of our EIS
                                                                                business, as reported under GAAP, and our proportionate share of
                                                                                income (loss) from Change Healthcare. Fiscal 2017 operating profit
                                                                                for this segment also included the core MTS businesses, which were
                                                                                contributed to the Change Healthcare joint venture in the fourth
                                                                                quarter of fiscal 2017.
                                                                                 
For more information relating to the Adjusted Earnings (Non-GAAP),
Constant Currency (Non-GAAP) and Adjusted Operating Profit Margin
Excluding Noncontrolling Interests (Non-GAAP) definitions, refer to
the section entitled "Supplemental Non-GAAP Financial Information"
of this release.
                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                     Schedule 4A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                   McKESSON CORPORATION
                                                                                                                                                                                                               RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
                                                                                                                                                                                                                         EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     (in millions)
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                         Quarter Ended December 31, 2017                                                                                                                                                                            Quarter Ended December 31, 2016
                                                                                          ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Distribution                   Technology                     Corporate                              Total                                        Distribution                   Technology                     Corporate                       Total
                                                                                                       Solutions                                        Solutions                                                                                                                                                 Solutions                                        Solutions
                                                                                          --------------------------------   -------------------- ------------------   -------------------- --------------------------------   -------------------- --------------------------------                        ------------------   -------------------- --------------------------------   -------------------- ------------------   -------------------- --------------------------------
As Reported (GAAP):
--------------------------------------------------------------------
Revenues                                                                                       $ 53,617                                                $      -                                  $      -                                                $ 53,617                                                $ 49,436                                  $    694                                                $      -                                  $ 50,130
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Income from continuing operations before interest expense and income                           $    819                                                $     65                                  $   (120 )                                              $    764                                                $    813                                  $    132                                                $    (91 )                                $    854
taxes (1) (2) (3) (4) (5)
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Pre-Tax Adjustments:
--------------------------------------------------------------------
Amortization of acquisition-related intangibles (4)                                            $    122                                                $     71                                  $      -                                                $    193                                                $    100                                  $      2                                                $      -                                  $    102
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Acquisition-Related Expenses and Adjustments                                                         31                                                      61                                         2                                                      94                                                      43                                        33                                                      (1 )                                      75
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
LIFO Inventory-Related Adjustments                                                                   (2 )                                                     -                                         -                                                      (2 )                                                  (155 )                                       -                                                       -                                      (155 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Gains from Antitrust Legal Settlements                                                                -                                                       -                                         -                                                       -                                                      (2 )                                       -                                                       -                                        (2 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Restructuring Charges, Net                                                                           20                                                      (1 )                                      13                                                      32                                                       6                                        (4 )                                                     -                                         2
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Other Adjustments, Net                                                                                1                                                    (143 )                                      (2 )                                                  (144 )                                                     -                                         -                                                       -                                         -
                                                                                                                                                                                                  
                                                                                          ------------------------------------------------------- ----------------------------------------- ------------------------------------------------------- -----------------------------------                     ----------------------------------------- ------------------------------------------------------- ----------------------------------------- -----------------------------------
Total pre-tax adjustments                                                                      $    172          $    (12 )             $     13          $    173                             $     (8 )             $     31          $     (1 )             $     22  
                                                                                          ------ ------ -------------------- -------------------- ------ ------ ------ -------------------- ------ ------ -------------------- -------------------- ------ ------ --------------------                      ------ ------ ------ -------------------- ------ ------ -------------------- -------------------- ------ ------ ------ -------------------- ------ ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Adjusted Earnings (Non-GAAP):
--------------------------------------------------------------------
Revenues                                                                                       $ 53,617                                                $      -                                  $      -                                                $ 53,617                                                $ 49,436                                  $    694                                                $      -                                  $ 50,130
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Income from continuing operations before interest expense and income                           $    991                                                $     53                                  $   (107 )                                              $    937                                                $    805                                  $    163                                                $    (92 )                                $    876
taxes (4) (5)
(1)                                        Fiscal 2018, as reported under GAAP, includes a pre-tax
                                                              restructuring charge of $6 million ($5 million after-tax) within our
                                                              Distribution Solutions segment.
(2)                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax credit of
                                                              $46 million ($30 million after-tax) representing a reduction in our
                                                              TRA liability within our Technology Solutions segment as a result of
                                                              the enactment of the 2017 Tax Act.
(3)                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $109
                                                              million ($30 million after-tax) recognized from the sale of our EIS
                                                              reporting unit within the Technology Solutions segment.
(4)                                                           Fiscal 2018 for our Technology Solutions segment includes
                                                              amortization of equity investment intangibles and other acquired
                                                              intangibles of $70 million included in our proportionate share of
                                                              the income (loss) from our equity method investment in Change
                                                              Healthcare.
(5)                                                           The results of our Technology Solutions segment for fiscal 2018
                                                              includes only the gain on sale of our EIS business, as reported
                                                              under GAAP, and our proportionate share of income (loss) from Change
                                                              Healthcare. Fiscal 2017 operating profit for this segment also
                                                              included the core MTS businesses, which were contributed to the
                                                              Change Healthcare joint venture in the fourth quarter of fiscal 2017.
                                                               
For more information relating to the Adjusted Earnings (Non-GAAP)
definition, refer to the section entitled "Supplemental Non-GAAP
Financial Information" of this release.
                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                     Schedule 4B
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                     McKESSON CORPORATION
                                                                                                                                                                                                                            RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
                                                                                                                                                                                                                                     EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     (in millions)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                        Nine Months Ended December 31, 2017                                                                                                                                                                                         Nine Months Ended December 31, 2016
                                                                                   -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Distribution                          Technology                            Corporate                               Total                                                Distribution                    Technology                     Corporate                               Total
                                                                                                 Solutions                                               Solutions                                                                                                                                                                 Solutions                                         Solutions
                                                                                   ---------------------------------   -------------------- --------------------------------   -------------------- --------------------------------   -------------------- ---------------------------------                        ---------------------------------   -------------------- --------------------  -------------------- --------------------------------   -------------------- ---------------------------------
As Reported (GAAP):
-------------------------------------------------------------
Revenues                                                                                $ 156,489                                                $    240                                                $      -                                                $ 156,729                                                $ 147,722                                                    $      2,098                           $      -                                                $ 149,820
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Income from continuing operations before interest expense and                           $   1,920                                                $    (46 )                                              $   (337 )                                              $   1,537                                                $   2,592                                                    $        126                           $   (270 )                                              $   2,448
income taxes (1) (2) (3) (4) (5) (6) (7) (8)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Pre-Tax Adjustments:
-------------------------------------------------------------
Amortization of acquisition-related intangibles (6)                                     $     369                                                $    215                                                $      -                                                $     584                                                $     311                                                    $         21                           $      -                                                $     332
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Acquisition-Related Expenses and Adjustments                                                   68                                                     207                                                       2                                                      277                                                      104                                                              58                                  4                                                      166
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
LIFO Inventory-Related Adjustments                                                             (5 )                                                     -                                                       -                                                       (5 )                                                   (151 )                                                             -                                  -                                                     (151 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Gains from Antitrust Legal Settlements                                                          -                                                       -                                                       -                                                        -                                                     (144 )                                                             -                                  -                                                     (144 )
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Restructuring Charges, Net                                                                    261                                                      (1 )                                                    32                                                      292                                                       13                                                               2                                 (1 )                                                     14
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Other Adjustments, Net                                                                        304                                                    (143 )                                                    (9 )                                                    152                                                       (6 )                                                           290                                  -                                                      284
                                                                                                                                                                                                                           
                                                                                   -------------------------------------------------------- ------------------------------------------------------- ------------------------------------------------------- ------------------------------------                     -------------------------------------------------------- ------------------------------------------ ------------------------------------------------------- ------------------------------------
Total pre-tax adjustments                                                               $     997          $    278          $     25          $   1,300                             $     127              $        371        $      3          $     501  
                                                                                   ------ ------- -------------------- -------------------- ------ ------ -------------------- -------------------- ------ ------ -------------------- -------------------- ------ ------- --------------------                      ------ ------- -------------------- -------------------- ---------- ---------- -------------------- ------ ------ -------------------- -------------------- ------ ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Adjusted Earnings (Non-GAAP):
-------------------------------------------------------------
Revenues                                                                                $ 156,489                                                $    240                                                $      -                                                $ 156,729                                                $ 147,722                                                    $      2,098                           $      -                                                $ 149,820
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Income from continuing operations before interest                                       $   2,917                                                $    232                                                $   (312 )                                              $   2,837                                                $   2,719                                                    $        497                           $   (267 )                                              $   2,949
expense and income taxes (6) (8)
(1)                                        Fiscal 2018, as reported under GAAP, includes a pre-tax credit of
                                                              $46 million ($30 million after-tax) recognized in the third quarter
                                                              of fiscal 2018 representing a reduction in our TRA liability within
                                                              our Technology Solutions segment as a result of the enactment of the
                                                              2017 Tax Act. Fiscal 2018, as reported under GAAP, includes a
                                                              pre-tax gain of $37 million ($22 million after-tax) recognized in
                                                              the first quarter of fiscal 2018 related to the final net working
                                                              capital and other adjustments from the fiscal 2017 fourth quarter
                                                              Healthcare Technology Net Asset Exchange within our Technology
                                                              Solutions segment.
(2)                                                           Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
                                                              restructuring charge of $189 million ($157 million after-tax) to
                                                              impair the carrying value of certain intangible assets and other
                                                              assets primarily related to our retail business in the U.K. within
                                                              our Distribution Solutions segment recognized in the second
                                                              quarter of fiscal 2018. Fiscal 2018, as reported under GAAP, also
                                                              includes a pre-tax restructuring charge of $53 million ($45
                                                              million after-tax) primarily representing employee severance and
                                                              lease exit costs.
(3)                                                           Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
                                                              after-tax goodwill impairment charge of $350 million recognized in
                                                              the second quarter of fiscal 2018 for our McKesson Europe reporting
                                                              unit within the Distribution Solutions segment. There were no tax
                                                              benefits associated with this goodwill impairment charge. Fiscal
                                                              2017, as reported under GAAP, includes a non-cash pre-tax goodwill
                                                              impairment charge of $290 million ($282 million after-tax)
                                                              recognized in the second quarter of fiscal 2017 for our EIS
                                                              reporting unit within the Technology Solutions segment.
(4)                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $109
                                                              million ($30 million after-tax) recognized from the fiscal 2018
                                                              third quarter sale of our EIS reporting unit within the Technology
                                                              Solutions segment.
(5)                                                           Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
                                                              million ($26 million after-tax) recognized from the fiscal 2018
                                                              second quarter sale of an equity method investment within our
                                                              Distribution Solutions segment.
(6)                                                           Fiscal 2018 for our Technology Solutions segment includes
                                                              amortization of equity investment intangibles and other acquired
                                                              intangibles of $214 million included in our proportionate share of
                                                              the income (loss) from our equity method investment in Change
                                                              Healthcare.
(7)                                                           Fiscal 2017, as reported under GAAP, includes $144 million of net
                                                              cash proceeds primarily received in the first quarter of fiscal 2017
                                                              representing our share of antitrust legal settlements within our
                                                              Distribution Solutions segment.
(8)                                                           The results of our Technology Solutions segment for fiscal 2018
                                                              includes only our EIS business, the gain on sale of our EIS
                                                              business, as reported under GAAP, and our proportionate share of
                                                              income (loss) from Change Healthcare. Fiscal 2017 operating profit
                                                              for this segment also included the core MTS businesses, which were
                                                              contributed to the Change Healthcare joint venture in the fourth
                                                              quarter of fiscal 2017.
                                                               
For more information relating to the Adjusted Earnings (Non-GAAP)
definition, refer to the section entitled "Supplemental Non-GAAP
Financial Information" of this release.
                                                                                                             
                                                                                                                                                                                                                                   Schedule 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                  
                                                                                                             McKESSON CORPORATION
                                                                                                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                  (unaudited)
                                                                                                                 (in millions)
                                                                                                                                                                                                  
                                                                                                           December 31,                                March 31,  
                                                                                                               2017                                                                            2017
                                                                                                   ----------------------------                     ------------------------------------------------------------------------------------------
                                                                                                                                                                                                  
ASSETS
    Current Assets
        Cash and cash equivalents                                                                                     $  2,619                                                                 $                                        2,783
        Receivables, net                                                                                                20,015                                                                                                         18,215
        Inventories, net                                                                                                17,103                                                                                                         15,278
        Prepaid expenses and other                                                                      458                                                                                         672
                                                                                                   -------------------- ------                      -------------------------------------------- --------------------------------------------
            Total Current Assets                                                                                        40,195                                                                                                         36,948
    Property, Plant and Equipment, Net                                                                                   2,401                                                                                                          2,292
    Goodwill                                                                                                            11,828                                                                                                         10,586
    Intangible Assets, Net                                                                                               4,094                                                                                                          3,665
    Equity Method Investment in Change Healthcare                                                                        3,704                                                                                                          4,063
    Other Noncurrent Assets                                                                           1,991                                                                                       3,415
                                                                                                   -------------------- ------                      -------------------------------------------- --------------------------------------------
            Total Assets                                                                                              $ 64,213                                                                 $                                       60,969
                                                                                                   ==================== ======                      ============================================ ============================================
                                                                                                                                                                                                  
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
    Current Liabilities
        Drafts and accounts payable                                                                                   $ 33,009                                                                 $                                       31,022
        Short-term borrowings                                                                                              749                                                                                                            183
        Deferred revenue                                                                                                    68                                                                                                            346
        Current portion of long-term debt                                                                                  531                                                                                                          1,057
        Other accrued liabilities                                                                     3,295                                                                                       3,004
                                                                                                   -------------------- ------                      -------------------------------------------- --------------------------------------------
            Total Current Liabilities                                                                                   37,652                                                                                                         35,612
    Long-Term Debt                                                                                                       7,514                                                                                                          7,305
    Long-Term Deferred Tax Liabilities                                                                                   2,833                                                                                                          3,678
    Other Noncurrent Liabilities                                                                                         2,807                                                                                                          1,774
                                                                                                                                                                                                  
    Redeemable Noncontrolling Interests                                                                                  1,435                                                                                                          1,327
                                                                                                                                                                                                  
    McKesson Corporation Stockholders’ Equity                                                                           11,734                                                                                                         11,095
    Noncontrolling Interests                                                                            238                                                                                         178
                                                                                                   -------------------- ------                      -------------------------------------------- --------------------------------------------
            Total Equity                                                                             11,972                                                                                      11,273
                                                                                                   -------------------- ------                      -------------------------------------------- --------------------------------------------
            Total Liabilities, Redeemable Noncontrolling Interests and Equity                                         $ 64,213                                                                 $                                       60,969
                                                                                                   ==================== ======                      ============================================ ============================================
 
                                                                                                                                                                                                              Schedule 6
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                               
                                                                                                  McKESSON CORPORATION
                                                                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                       (unaudited)
                                                                                                      (in millions)
                                                                                                                                                                         
                                                                                                                                              Nine Months Ended December 31,
                                                                                                 ------------------------------------------------------------------------------------------------------------------------
                                                                                                                        2017                                                                  2016
                                                                                                 --------------------------------------------------                     -------------------------------------------------
                                                                                                                                                                         
OPERATING ACTIVITIES
    Net income                                                                                                      $   1,382                                                              $  1,530
    Adjustments to reconcile to net cash provided by operating
    activities:
        Depreciation and amortization                                                                                     697                                                                   663
        Goodwill impairment and other asset impairment charges                                                            539                                                                   290
        Deferred taxes                                                                                                   (847 )                                                                 122
        Share-based compensation expense                                                                                   57                                                                   109
        LIFO credits                                                                                                       (5 )                                                                (151 )
        Loss from equity method investment in Change Healthcare                                                           271                                                                     -
        Loss (gain) from sale of businesses and equity investments                                                       (155 )                                                                 113
        Other non-cash items                                                                                             (132 )                                                                  50
    Changes in operating assets and liabilities, net of acquisitions:
        Receivables                                                                                                    (1,046 )                                                                (654 )
        Inventories                                                                                                    (1,410 )                                                                (374 )
        Drafts and accounts payable                                                                                     1,203                                                                 1,891
        Deferred revenue                                                                                                 (134 )                                                                 (58 )
        Taxes                                                                                                             689                                                                    52
    Other                                                                                              214                            (274 )
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
            Net cash provided by operating activities                                                1,323                           3,309  
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                         
INVESTING ACTIVITIES
    Property acquisitions                                                                                                (269 )                                                                (246 )
    Capitalized software expenditures                                                                                    (123 )                                                                (123 )
    Acquisitions, net of cash and cash equivalents acquired                                                            (1,979 )                                                              (4,174 )
    Proceeds from/(payments for) sale of businesses and equity                                                            329                                                                   (91 )
    investments, net
    Payments received on Healthcare Technology Net Asset Exchange                                                         126                                                                     -
    Restricted cash for acquisitions                                                                                    1,469                                                                   935
    Other                                                                                              (36 )                                               80  
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
            Net cash used in investing activities                                                     (483 )                                           (3,619 )
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                         
FINANCING ACTIVITIES
    Proceeds from short-term borrowings                                                                                12,699                                                                 2,803
    Repayments of short-term borrowings                                                                               (12,133 )                                                              (1,405 )
    Repayments of long-term debt                                                                                         (545 )                                                                (392 )
    Common stock transactions:
        Issuances                                                                                                         114                                                                    89
        Share repurchases, including shares surrendered for tax withholding                                              (951 )                                                              (2,060 )
    Dividends paid                                                                                                       (192 )                                                                (192 )
    Other                                                                                             (139 )                                               12  
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
            Net cash used in financing activities                                                   (1,147 )                                           (1,145 )
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
Effect of exchange rate changes on cash and cash equivalents                                           143                            (159 )
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
Net decrease in cash and cash equivalents                                                                                (164 )                                                              (1,614 )
Cash and cash equivalents at beginning of period                                                     2,783                           4,048  
                                                                                                 -------------------- ------- --------------------                      -------------------- ------ --------------------
Cash and cash equivalents at end of period                                                                          $   2,619                                           $  2,434  
                                                                                                 ==================== ======= ====================                      ==================== ====== ====================
 
                                                                                                                                                                                                                                     1 of 2
                                                                                                                                                                                                               SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                    
In an effort to provide investors with additional information
regarding the Company’s financial results as determined by generally
accepted accounting principles ("GAAP"), McKesson Corporation (the
"Company" or "we") also presents the following Non-GAAP measures in
this press release. The Company believes the presentation of
Non-GAAP measures provides useful supplemental information to
investors with regard to its operating performance, as well as
assists with the comparison of its past financial performance to the
Company’s future financial results. Moreover, the Company believes
that the presentation of Non-GAAP measures assists investors’
ability to compare its financial results to those of other companies
in the same industry. However, the Company’s Non-GAAP measures used
in the press tables may be defined and calculated differently by
other companies in the same industry.
                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     ?  Adjusted Earnings (Non-GAAP): We define Adjusted Earnings as
                                     GAAP income from continuing operations attributable to McKesson,
                                     excluding amortization of acquisition-related intangibles,
                                     acquisition-related expenses and adjustments, Last-In-First-Out
                                     ("LIFO") inventory-related adjustments, gains from antitrust legal
                                     settlements, restructuring charges, other adjustments as well as the
                                     related income tax effects for each of these items, as applicable.
                                     The Company evaluates its definition of Adjusted Earnings on a
                                     periodic basis and updates the definition from time to time. The
                                     evaluation considers both the quantitative and qualitative aspects
                                     of the Company’s presentation of Adjusted Earnings. A reconciliation
                                     of McKesson’s GAAP financial results to Adjusted Earnings (Non-GAAP)
                                     is provided in Schedules 2, 3 and 4 of the financial statement
                                     tables included with this release.
                                     
                                     Amortization of acquisition-related
                                     intangibles - Amortization expenses of intangible assets
                                     directly related to business combinations and/or the formation of
                                     joint ventures and equity method investments.
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                     
                                     Acquisition-related expenses and adjustments
                                     - Transaction, integration and other expenses that are directly
                                     related to business combinations, the formation of joint ventures
                                     and the Healthcare Technology Net Asset Exchange. Examples include
                                     transaction closing costs, professional service fees, legal fees,
                                     restructuring or severance charges, retention payments and
                                     employee relocation expenses, facility or other exit-related
                                     expenses, certain fair value adjustments including deferred
                                     revenues, contingent consideration and inventory, recoveries of
                                     acquisition-related expenses or post-closing expenses, bridge loan
                                     fees, gains or losses related to foreign currency contracts
                                     entered into directly due to acquisitions, gains or losses on
                                     business combinations, and gain on the Healthcare Technology Net
                                     Asset Exchange.
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                     
                                     LIFO inventory-related adjustments -
                                     LIFO inventory-related non-cash expense or credit adjustments.
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                     
                                     Gains from antitrust legal settlements
                                     - Net cash proceeds representing the Company’s share of antitrust
                                     lawsuit settlements.
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                     
                                     Restructuring charges -
                                     Non-acquisition related restructuring charges that are incurred
                                     for significant programs in which we change our operations, the
                                     scope of a business undertaken by our business units, or the
                                     manner in which that business is conducted. Such charges may
                                     include employee severance, retention bonuses, facility closure or
                                     consolidation costs, lease or contract termination costs, asset
                                     impairments, accelerated depreciation and amortization, and other
                                     related expenses. The restructuring programs may be implemented
                                     due to the sale or discontinuation of a product line,
                                     reorganization or management structure changes, headcount
                                     rationalization, realignment of operations or products, and/or
                                     Company-wide cost saving initiatives. The amount and/or frequency
                                     of these restructuring charges are not part of our underlying
                                     business, which includes normal levels of reinvestment in the
                                     business. Any credit adjustments due to subsequent changes in
                                     estimates are also excluded.
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                     
                                     Other adjustments - The Company
                                     evaluates the nature and significance of transactions
                                     qualitatively and quantitatively on an individual basis and may
                                     include them in the determination of our Adjusted Earnings from
                                     time to time. While not all-inclusive, other adjustments may
                                     include: gains or losses from divestitures of businesses that do
                                     not qualify as discontinued operations and from dispositions of
                                     assets; asset impairments; adjustments to claim and litigation
                                     reserves for estimated probable losses; certain discrete benefits
                                     related to the December 2017 enactment of the 2017 Tax Cuts and
                                     Jobs Act; and other similar substantive and/or infrequent items as
                                     deemed appropriate.
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                     
                                     Income taxes on Adjusted Earnings are calculated in accordance with
                                     Accounting Standards Codification ("ASC") 740, "Income Taxes," which
                                     is the same accounting principle used by the Company when presenting
                                     its GAAP financial results.
                                     
                                     Additionally, our equity method investments’ financial results are
                                     adjusted for the above noted items.
                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                     2 of 2
                                                                                                                                                                                                         SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued)
                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     ?  Constant Currency (Non-GAAP): To present our financial
                                     results on a constant currency basis, we convert current year period
                                     results of our operations in foreign countries, which are recorded
                                     in local currencies, into U.S. dollars by applying the average
                                     foreign currency exchange rates of the comparable prior year period.
                                     To present Adjusted Earnings per diluted share on a constant
                                     currency basis, we estimate the impact of foreign currency rate
                                     fluctuations on the Company’s noncontrolling interests and adjusted
                                     income tax expense, which may vary from quarter to quarter. The
                                     supplemental constant currency information of the Company’s GAAP
                                     financial results and Adjusted Earnings (Non-GAAP) is provided in
                                     Schedule 3 of the financial statement tables included with this
                                     release.
                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     ?  Adjusted Operating Profit Margin Excluding Noncontrolling
                                     Interests (Non-GAAP): The Company has arrangements involving
                                     third-party noncontrolling interests. As a result, our pre-tax
                                     results are affected by the portion of pre-tax earnings attributable
                                     to noncontrolling interests. To provide additional useful
                                     information to investors, we present adjusted operating profit
                                     margin excluding noncontrolling interests for our Distribution
                                     Solutions segment. We believe such information provides a framework
                                     for assessing how our business performed excluding the effect of
                                     pre-tax earnings that is not attributable to McKesson. We calculate
                                     adjusted operating profit excluding noncontrolling interests by
                                     removing pre-tax earnings attributable to noncontrolling interests
                                     from adjusted operating profit (Non-GAAP). Adjusted operating profit
                                     margin excluding noncontrolling interests is calculated by dividing
                                     the adjusted operating profit excluding noncontrolling interests
                                     with the applicable segment’s revenues. This information is
                                     supplemental to the Company’s GAAP financial results and is provided
                                     in Schedule 3 of this document.
                                                                                                                                                                                                                                                                                                                                                                                                                                                    
The Company internally uses Non-GAAP financial measures in
connection with its own financial planning and reporting processes.
Specifically, Adjusted Earnings serves as one of the measures
management utilizes when allocating resources, deploying capital and
assessing business performance and employee incentive compensation.
The Company conducts its business internationally in local
currencies, including Euro, British pound sterling and Canadian
dollars. As a result, the comparability of our results reported in
U.S. dollars can be affected by changes in foreign currency exchange
rates. We present constant currency information to provide a
framework for assessing how our business performed excluding the
estimated effect of foreign currency exchange rate fluctuations. We
present adjusted operating profit margin excluding noncontrolling
interests to provide a framework for assessing how our business
performed excluding the effect of net income that is not
attributable to McKesson. Nonetheless, Non-GAAP financial results
and related measures disclosed by the Company should not be
considered a substitute for, nor superior to, financial results and
measures as determined or calculated in accordance with GAAP.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180201005572r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005572/en/

SOURCE: McKesson Corporation

McKesson Corporation 
Craig Mercer, 415-983-8391 (Investors and Financial Media) 
Craig.Mercer@McKesson.com 
or 
Kristin Hunter Chasen, 415-983-8974 (General and Business Media) 
Kristin.Chasen@McKesson.com


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2018 StockSelector.com. All rights reserved.