Skip to content

MCK · MCKESSON CORP

31 filings

10-K

MCK 10-K Annual Reports

MCKESSON CORP - 31 annual reports

Filing record · 2016–202610-K1110-Q328-K146

2026
MCKESSON CORP Annual Report, Year Ended Mar 31, 2026
McKesson Corporation (MCK) reported strong financial performance for the fiscal year ended March 31, 2026, with revenues increasing by 12% to $403.4 billion and diluted earnings per share rising significantly to $38.38. This growth was driven by solid performance across its business segments, particularly in North American Pharmaceutical and Oncology & Multispecialty. The company also actively managed its capital, returning $5.1 billion to shareholders through share repurchases and dividends, and raised its quarterly dividend. Strategically, McKesson is advancing its business model through significant acquisitions in the Oncology & Multispecialty segment, including PRISM Vision and Core Ventures. Concurrently, the company announced its intention to separate its Medical-Surgical Solutions segment, entering into an agreement for Apollo Funds to acquire a minority interest, signaling a focused approach on core healthcare services. The company also reported no goodwill impairment and continued to manage its operational efficiencies through ongoing restructuring initiatives.
May 8, 2026
2025
MCKESSON CORP Annual Report, Year Ended Mar 31, 2025
McKesson Corporation's fiscal year 2025 performance demonstrated robust revenue growth, up 16% year-over-year, driven primarily by its U.S. Pharmaceutical segment, which saw increased volumes from retail national accounts and growth in specialty pharmaceuticals. The company also reported a significant increase in diluted earnings per share from continuing operations to $25.72, up from $22.39 in the prior year. Key financial events impacting the year included a $667 million charge related to the sale of its Canadian retail businesses and $298 million in restructuring charges for enterprise-wide efficiency initiatives. McKesson returned $3.5 billion to shareholders through share repurchases and dividends, underscoring its commitment to capital return. The company is actively managing significant legal and regulatory challenges, particularly those related to opioid litigation, for which it has accrued $6.4 billion in liabilities. While these are ongoing, the company's core pharmaceutical distribution and technology solutions segments appear to be performing well, evidenced by the revenue and EPS growth. Strategic investments in technology and ongoing efforts to drive operational efficiencies are key focus areas for future performance.
May 9, 2025
2024
MCKESSON CORP Annual Report, Year Ended Mar 31, 2024
McKesson Corporation (MCK) has filed its 10-K for the fiscal year ended March 30, 2024, detailing its performance as a diversified healthcare services leader. The company reported increased revenues, primarily driven by its U.S. Pharmaceutical segment, which benefited from growth in specialty pharmaceuticals and higher volumes. However, diluted earnings per share saw a decrease compared to the prior year, impacted by a significant provision for bad debts related to the bankruptcy of its customer, Rite Aid. Mckesson continues to manage various legal and regulatory matters, including significant opioid-related litigation, which resulted in a substantial charge for the current fiscal year. Despite these challenges, the company returned considerable capital to shareholders through share repurchases and dividends, underscoring its commitment to shareholder value. The company also highlighted its ongoing investments in technology and operational efficiencies across its four main business segments: U.S. Pharmaceutical, Prescription Technology Solutions, Medical-Surgical Solutions, and International.
May 8, 2024
2023
MCKESSON CORP Annual Report, Year Ended Mar 31, 2023
McKesson Corporation's (MCK) 2023 10-K filing highlights a year of strategic divestitures and acquisitions, with a notable focus on exiting European operations while strengthening its Prescription Technology Solutions (RxTS) segment. Revenues saw a 5% increase, primarily driven by growth in the U.S. Pharmaceutical segment, which benefited from market growth, specialty pharmaceuticals, and higher branded drug prices. This top-line expansion was partially offset by divestitures in the International segment and unfavorable foreign currency impacts. Despite revenue growth, gross profit experienced a 6% decrease, mainly due to the European divestitures and foreign currency impacts, though this was partially mitigated by gains in specialty pharmaceuticals and generics within the U.S. Pharmaceutical segment. The company demonstrated strong expense management, with total operating expenses decreasing by 28%, largely due to the prior year's significant remeasurement charges related to European divestitures. Diluted earnings per share from continuing operations saw a substantial increase, primarily attributed to the reduced remeasurement charges compared to the prior year and a lower share count resulting from ongoing share repurchase programs. Key strategic moves included the acquisition of Rx Savings Solutions, LLC, to enhance patient affordability and adherence solutions, and the formation of SCRI Oncology, LLC with HCA Healthcare to advance cancer research. The company also returned significant capital to shareholders through share repurchases and increased its quarterly dividend. Investors should monitor the ongoing opioid litigation, which continues to be a significant contingent liability, although the company has made substantial progress on settlements.
May 9, 2023
2022
MCKESSON CORP Annual Report, Year Ended Mar 31, 2022
McKesson Corporation's fiscal year 2022 (ending March 31, 2022) was marked by robust revenue growth and a significant recovery from the impacts of the COVID-19 pandemic in the prior year. Total revenues increased by 11% to $264 billion, driven primarily by the U.S. Pharmaceutical segment. The company saw improvements in gross profit, up 8%, bolstered by specialty pharmaceuticals, COVID-19 vaccine distribution, and increased patient visits in primary care. A significant strategic development during the year was the initiation of exits from European businesses, including the sale of UK and Austrian operations and agreements to sell EU businesses. These divestitures are part of a strategy to focus on core healthcare services. While these actions led to substantial charges related to fair value remeasurements, the underlying operational performance of the company remained strong. The company also reported a substantial charge related to its estimated liability for opioid-related claims, a significant ongoing legal matter. Despite these charges, McKesson returned $3.8 billion to shareholders through repurchases and dividends, underscoring a commitment to shareholder returns.
May 9, 2022
2021
MCKESSON CORP Annual Report, Year Ended Mar 31, 2021
McKesson Corporation's 2021 10-K report highlights a year of revenue growth driven primarily by its U.S. Pharmaceutical segment, which saw a 3% increase to $238.2 billion, largely due to market growth. The company played a significant role in the COVID-19 pandemic response, distributing vaccines and ancillary supplies, which positively impacted its Medical-Surgical Solutions and U.S. Pharmaceutical segments. However, the reported net loss attributable to McKesson Corporation was substantial at $(4.5) billion, primarily due to a significant charge of $8.1 billion related to its estimated liability for opioid-related claims. Despite this, the company returned $1.0 billion to shareholders through stock repurchases and dividends, and its financial condition remained strong with access to liquidity. The company also reorganized its business segments into four reportable divisions: U.S. Pharmaceutical, International, Medical-Surgical Solutions, and Prescription Technology Solutions.
May 12, 2021
2020
MCKESSON CORP Annual Report, Year Ended Mar 31, 2020
McKesson Corporation's 2020 10-K filing highlights a year of significant revenue growth, driven primarily by its U.S. Pharmaceutical and Specialty Solutions segment. The company experienced an 8% increase in revenues, reaching $231.1 billion, fueled by market growth, branded pharmaceutical price increases, and increased volumes. Despite revenue growth, gross profit saw a more modest 2% increase, impacted by factors like lower net cash proceeds from antitrust legal settlements and unfavorable foreign currency exchange fluctuations. The company's financial performance was also significantly affected by non-recurring items. These included substantial goodwill impairment charges in previous years, notably impacting the European Pharmaceutical Solutions segment, and more recently, charges related to the remeasurement of assets for a German wholesale business joint venture. Notably, McKesson completed the separation of its investment in Change Healthcare JV, recognizing a significant gain related to this transaction. The company also addressed ongoing opioid-related litigation, recording a substantial charge for a settlement with two Ohio counties. Operationally, McKesson continued to return value to shareholders through share repurchases ($1.9 billion) and dividends ($294 million). The company maintained a strong liquidity position throughout the year, even as it navigated the initial impacts of the COVID-19 pandemic late in the fiscal year, which had a muted financial impact due to its timing. Looking ahead, McKesson faces ongoing risks related to litigation, regulatory changes, competition, and supply chain disruptions, particularly in light of the evolving COVID-19 situation.
May 22, 2020
2019
MCKESSON CORP Annual Report, Year Ended Mar 31, 2019
McKesson Corporation's (MCK) 10-K filing for the fiscal year ended March 31, 2019, reveals a company navigating a dynamic healthcare landscape. The report highlights the company's core business in pharmaceutical and medical-surgical distribution, alongside its specialty care and technology solutions. While revenues saw an increase, driven by market growth and acquisitions, significant goodwill and asset impairments, particularly in the European segment, impacted profitability. The company also detailed ongoing restructuring initiatives aimed at improving efficiency and cost structures. Investors should note the company's substantial revenue generation but also the substantial goodwill impairments and restructuring charges. Key operational segments include U.S. Pharmaceutical and Specialty Solutions, European Pharmaceutical Solutions, and Medical-Surgical Solutions. The company continues to manage risks associated with regulatory changes, pricing pressures, and supply chain complexities, while also actively engaging in share repurchases and dividend payments.
May 15, 2019
2018
MCKESSON CORP Annual Report, Year Ended Mar 31, 2018
McKesson Corporation's 2018 10-K filing reveals a complex operating landscape, marked by significant goodwill impairments and strategic adjustments. While the company experienced revenue growth in its core Distribution Solutions segment, driven by market expansion and acquisitions, the overall profitability was heavily impacted by substantial non-cash goodwill impairment charges totaling $1.7 billion related to its McKesson Europe and Rexall Health reporting units. These impairments stem from ongoing reimbursement pressures in the UK retail market and challenging dynamics in Canada. The company also divested its Enterprise Information Solutions (EIS) business and contributed a significant portion of its Technology Solutions business to a joint venture, Change Healthcare. Despite these headwinds, McKesson continues to return capital to shareholders through dividends and share repurchases, and it has announced a strategic growth initiative focused on efficiency and innovation. The company's financial health remains robust with significant cash flows from operations, although its significant customer concentration, particularly with CVS Health, and ongoing legal and regulatory scrutiny, especially concerning controlled substance distribution, represent key risks.
May 24, 2018
2017
MCKESSON CORP Annual Report, Year Ended Mar 31, 2017
McKesson Corporation's 2017 10-K filing reveals a year of significant growth and strategic repositioning. The company, a global leader in healthcare supply chain management, reported a 4% increase in total revenues to $198.5 billion, primarily driven by its Distribution Solutions segment. This growth was supported by market expansion, acquisitions, and increased business with existing customers, despite facing weaker pharmaceutical manufacturer pricing trends. A pivotal development during the fiscal year was the contribution of the majority of McKesson's Technology Solutions businesses to form a joint venture, Change Healthcare. This strategic move, which resulted in a significant pre-tax gain of $3.9 billion, allowed McKesson to focus more intently on its core distribution and specialty care offerings. Despite this large gain, the company also recorded a $290 million goodwill impairment charge related to its EIS business within the Technology Solutions segment, highlighting potential challenges in certain technology areas. McKesson continued its commitment to shareholder returns through share repurchases and dividends, reflecting a focus on enhancing shareholder value while navigating a complex and evolving healthcare landscape.
May 22, 2017
2016
MCKESSON CORP Annual Report, Year Ended Mar 31, 2016
McKesson Corporation's fiscal year 2016 (ending March 31, 2016) report highlights a period of significant revenue growth, driven primarily by its Distribution Solutions segment, which accounted for approximately 98% of consolidated revenues. The company experienced a 7% increase in total revenues to $190.9 billion, largely due to market growth and expanded business with existing customers in North America, partially offset by unfavorable foreign currency effects and customer losses. Despite revenue growth, the company's gross profit margin saw a slight decrease, mainly attributed to lower sell margins in North America distribution, though this was partially offset by benefits from global procurement arrangements and lower LIFO-related inventory charges. Operating expenses also decreased by 7% year-over-year, benefiting from the sale of certain businesses and lower acquisition-related expenses, but were impacted by restructuring charges. Net income attributable to McKesson Corporation saw a substantial increase of 53% to $2.26 billion, leading to diluted earnings per share of $9.70. The company also continued its commitment to returning capital to shareholders through share repurchases and dividend increases.
May 5, 2016
2015
MCKESSON CORP Annual Report, Year Ended Mar 31, 2015
McKesson Corporation's 2015 10-K filing reveals a year of significant revenue growth, primarily driven by the acquisition of Celesio AG, which expanded its international footprint. The company's Distribution Solutions segment continues to be the dominant revenue generator, accounting for approximately 98% of total revenues. While the company reported strong revenue increases, it also faced increased operating expenses, partly due to acquisition-related costs and a significant settlement charge for controlled substance distribution claims. Despite these operational costs, McKesson demonstrated a commitment to shareholder returns through continued dividend payments and share repurchases. The company's strategic acquisitions and diverse business offerings position it as a major player in the healthcare distribution and technology sectors. However, investors should remain aware of the competitive landscape and the ongoing regulatory environment within the healthcare industry, which could impact future performance.
May 12, 2015
2014
MCKESSON CORP Annual Report, Year Ended Mar 31, 2014
McKesson Corporation's 2014 10-K filing highlights a year of significant growth and strategic expansion, largely driven by the acquisition of Celesio AG. The company reported a substantial increase in revenues, reaching $137.6 billion, a 13% rise from the previous year, primarily fueled by its Distribution Solutions segment. This segment, which constitutes the vast majority of McKesson's revenue, saw growth from increased drug utilization, price increases, and the strategic integration of acquired businesses. The company also demonstrated a focus on operational efficiency and technology development within its two core segments: Distribution Solutions and Technology Solutions. While the Distribution Solutions segment continued to dominate revenue, the Technology Solutions segment also showed growth, driven by acquisitions and increased claims processing volume. McKesson continues to navigate a complex and evolving healthcare landscape, facing competition and regulatory scrutiny, but the acquisition of Celesio positions it for expanded global reach and a strengthened market position.
May 14, 2014
2013
MCKESSON CORP Annual Report, Year Ended Mar 31, 2013
McKesson Corporation's 2013 10-K filing reveals a company with robust operations primarily driven by its Distribution Solutions segment, which accounts for the vast majority of its revenue. The company experienced stable revenues year-over-year, with total revenues reaching $122.455 billion for the fiscal year ending March 31, 2013. This stability was maintained despite some customer losses and price deflation in the generics market, offset by market growth and strategic acquisitions, notably the acquisition of PSS World Medical. Profitability showed strength, with gross profit increasing due to higher generics income, business acquisitions, and improved buy margins, though partially offset by decreased sell margins and product alignment charges. The company also continued its share repurchase program, returning value to shareholders, and maintained a solid financial position with adequate liquidity. Despite facing various legal proceedings and regulatory challenges inherent in the healthcare industry, McKesson demonstrated resilience, with management expressing confidence in its internal controls and future prospects.
May 7, 2013
2012
MCKESSON CORP Annual Report, Year Ended Mar 31, 2012
McKesson Corporation's 2012 10-K filing details a strong year of revenue growth, primarily driven by its Distribution Solutions segment, which accounted for 97% of total revenues. The company reported a 10% increase in revenue to $122.7 billion, with significant contributions from the acquisition of US Oncology. Gross profit also saw a 10% increase, benefiting from higher generic drug sales and improved margins in both segments. Operating expenses rose due to the US Oncology acquisition and increased employee compensation, but were partly offset by lower litigation charges compared to the prior year. The company demonstrated a commitment to shareholder returns through substantial share repurchases, including a significant Accelerated Share Repurchase (ASR) program. McKesson's financial position remained robust, with strong operating cash flow supporting its activities and a stable debt-to-capital ratio.
May 2, 2012
2011
MCKESSON CORP Annual Report, Year Ended Mar 31, 2011
McKesson Corporation's fiscal 2011 10-K (fiscal year ended March 31, 2011) shows a company whose revenue grew 3% to $112.1 billion, driven mainly by its Distribution Solutions segment, which accounts for about 97% of consolidated revenue. Gross profit rose 5% to $6.0 billion and gross margin widened 11 basis points to 5.33%, helped by higher buy margin, more generic drug sales, and a $51 million antitrust settlement credit, partly offset by a $72 million impairment on the Technology Solutions software product HzERM. Operating expenses rose to $4.1 billion, including $213 million of AWP litigation charges. Net income was $1.202 billion and diluted EPS was $4.57, versus $4.62 in fiscal 2010; continuing-operations EPS fell to $4.29 from $4.62, so the headline earnings decline comes from continuing operations rather than the one-time gain on the MAP sale. The balance sheet changed meaningfully in the year. The $2.1 billion acquisition of US Oncology, closed December 30, 2010, lifted total debt to $4.0 billion from $2.3 billion, and the debt-to-capital ratio rose to 35.7% from 23.4%. Management also returned substantial capital: $2.05 billion of share repurchases and $171 million of dividends, with the quarterly dividend raised to $0.18 and then to $0.20 in April 2011, and a new $1.0 billion repurchase authorization approved in April 2011. Operating cash flow was steady at $2.34 billion, and return on equity was 16.9%. Key risks for investors include heavy customer concentration (the top ten customers were about 51% of revenue, with CVS and Rite Aid at 14% and 11%), pending AWP litigation with public payers whose reserve stood at $330 million, thin distribution margins, and a $169 million Canadian transfer-pricing assessment. Management indicated that the Affordable Care Act is not expected to have a material impact.
May 5, 2011
2010
MCKESSON CORP Annual Report, Year Ended Mar 31, 2010
McKesson Corporation's fiscal 2010 10-K (fiscal year ended March 31, 2010) shows a company whose core pharmaceutical distribution business drove steady top-line growth and a meaningful rebound in profitability. Revenues rose 2% to $108.7 billion, with the Distribution Solutions segment accounting for roughly 97% of the total. Gross profit increased 6% to $5.7 billion, and gross margin improved 18 basis points to 5.22%, helped by flu-season demand, higher-margin generics, and better branded-manufacturer buy-side compensation. Diluted EPS rose to $4.62 from $2.95, but the comparison is flattered by the prior year's $493 million pre-tax AWP litigation charge. Income from continuing operations before taxes increased 75% to $1.9 billion, and return on stockholders' equity improved to 18.7% from 13.2%. The balance sheet strengthened as well. Cash rose to $3.7 billion, the company repaid $215 million of maturing notes, and net debt turned negative (net debt to net capital employed of -23.5%). Operating cash flow more than doubled to $2.3 billion, aided by better management of drafts and accounts payable. Management also authorized an additional $1.0 billion share repurchase in April 2010 and kept the quarterly dividend at $0.12 per share. Investors should weigh the concentration risk that underpins this model. The ten largest customers generated about 53% of revenues, and CVS Caremark and Rite Aid alone accounted for roughly 15% and 12%. The company also faces ongoing litigation, including public-payor AWP suits and a qui tam action with potential damages described as several billion dollars, and it notes pending changes from the April 2010 adoption of new accounting rules that may treat its receivables sales facility as secured borrowing.
May 4, 2010
2009
MCKESSON CORP Annual Report, Year Ended Mar 31, 2009
McKesson Corporation's fiscal 2009 Form 10-K (fiscal year ended March 31, 2009) reports revenues of $106.6 billion, up 4.8% from $101.7 billion in fiscal 2008, driven almost entirely by its Distribution Solutions segment (97% of revenue). Gross margin improved to 5.04% from 4.93%, but reported profitability fell sharply: diluted EPS was $2.95 versus $3.32 a year earlier, and net income declined to $823 million from $990 million. The decline is largely explained by a pre-tax, non-cash $493 million charge ($311 million after-tax) for Average Wholesale Price (AWP) litigation, comprising a $350 million settlement of private payor claims and a $143 million reserve for public payor claims. Excluding that charge, the company's operating performance was steadier, though operating expenses rose 18% and Distribution Solutions segment operating margin compressed to 1.12% from 1.50%. Balance sheet and cash flow metrics show moderate leverage and shareholder returns. Total debt rose to $2.5 billion, the debt-to-capital ratio increased to 28.9% from 22.7%, and cash rose to $2.1 billion. Operating cash flow was $1.35 billion, and the company repurchased $484 million of stock while paying $116 million in dividends, which had been raised to $0.12 per quarter in April 2008. Share repurchase authorization of $830 million remained available as of March 31, 2009. The stock price performance graph shows MCK's total return fell to $120.18 by March 2009 from $177.74 a year earlier, lagging the S&P 500. Investors should weigh the concentration risk in the business: its two largest customers, CVS Caremark and Rite Aid, accounted for 14% and 12% of revenue, and the ten largest customers accounted for about 52%. Ongoing litigation, including the AWP matters, the Roby employment case, and the RxUSA antitrust suit seeking roughly $1.6 billion, remains a material uncertainty, and the company noted it could not estimate remaining possible losses in several pending matters.
May 5, 2009
2008
MCKESSON CORP Annual Report, Year Ended Mar 31, 2008
McKesson Corporation's fiscal 2008 10-K (fiscal year ended March 31, 2008) shows a company growing revenue faster than in prior years while profitability improved modestly. Revenues rose 9.4% to $101.7 billion, driven mainly by the Distribution Solutions segment (97% of revenue), with Canada, specialty pharmaceuticals (OTN acquisition) and Technology Solutions (Per-Se acquisition) contributing. Gross profit grew 16% to $5.0 billion, lifting gross margin to 4.93% from 4.66%, helped by a richer mix of higher-margin Technology Solutions revenue. Diluted EPS rose to $3.32 from $2.99, with net income of $990 million; excluding Securities Litigation items, EPS was $3.31 versus $2.71 a year earlier, a stronger underlying improvement than the headline figure suggests. Capital allocation and balance sheet were the other major themes. Management repurchased 28 million shares for $1.686 billion, approved a new $1.0 billion buyback in April 2008, and announced a doubling of the quarterly dividend from six to twelve cents. Operating cash flow fell to $869 million, but this was depressed by a $962 million release of restricted cash tied to the Securities Litigation settlement; excluding that, operating cash flow was about $1.83 billion. Total debt was $1.8 billion with a debt-to-capital ratio of 22.7%, well below the 56.5% covenant. Investors should note the concentration risk: the two largest customers, CVS Caremark and Rite Aid, account for 14% and 13% of revenue, and the ten largest customers account for about 53%. Litigation remains significant, including a pending average wholesale price (AWP) class action with class certification granted in March 2008 and a $1.6 billion secondary-wholesaler antitrust suit. Most Securities Litigation matters have now been resolved.
May 7, 2008
2007
MCKESSON CORP Annual Report, Year Ended Mar 31, 2007
McKesson Corporation's fiscal 2007 10-K (fiscal year ended March 31, 2007) shows a company growing revenue and earnings while leaning heavily on its core pharmaceutical distribution business. Revenues rose 7% to $93.0 billion, driven by Pharmaceutical Solutions, which accounted for over 95% of revenue. Diluted EPS was $2.99 versus $2.38 in fiscal 2006, and net income reached $913 million. Excluding Securities Litigation charges and credits, diluted EPS was $2.71, up from $2.48, so the underlying improvement is real but smaller than the headline figure. Gross margin improved 32 basis points to 4.66%, helped by better U.S. pharmaceutical distribution margins and generic drug sales, while operating expense growth outpaced revenue growth, partly from acquisitions and share-based compensation. The balance sheet and capital allocation changed meaningfully during the year. McKesson spent about $1.9 billion on acquisitions, most notably Per-Se Technologies for roughly $1.8 billion including assumed debt, which expanded the Provider Technologies segment. It funded this with $1 billion of new notes and an interim credit facility. Total debt rose to $1.96 billion, the debt-to-capital ratio climbed to 23.8% from 14.4%, and net debt to net capital employed was essentially flat near 0.1%. The company repurchased $1.0 billion of stock during the year and authorized another $1.0 billion repurchase plan in April 2007. Management also disclosed that the Securities Litigation accrual stood at $983 million, with some matters still pending. A notable tax benefit of $83 million came from an IRS private letter ruling confirming the deductibility of the $960 million settlement. Investors should note the concentration risk. The ten largest customers represented about 51% of revenue, and the largest customer, Caremark RX, accounted for about 11%. Margins in the distribution business also depend on manufacturer compensation arrangements that have shifted away from inflation-based models, and the company has exposure to pending litigation including Vioxx, fen-phen, asbestos, and antitrust matters. The 2008 reorganization into two new segments, McKesson Distribution Solutions and McKesson Technology Solutions, will change how future results are reported.
May 9, 2007
2006
MCKESSON CORP Annual Report, Year Ended Mar 31, 2006
McKesson Corporation's fiscal 2006 10-K (year ended March 31, 2006) reports record revenue of $88.1 billion, up 10% from $80.1 billion, driven almost entirely by the Pharmaceutical Solutions segment, which contributed about 95% of revenue. Gross profit rose 12% to $3.9 billion, helped by a shift in manufacturer compensation toward percentage-of-purchase arrangements (reducing dependence on inflation-driven price increases) and higher antitrust settlement receipts ($95 million). Net income was $751 million, or $2.38 diluted EPS, a sharp rebound from the prior-year net loss of $157 million caused by a $1.2 billion Securities Litigation charge. Excluding the litigation charges, fiscal 2006 net income was $781 million ($2.48 per diluted share) versus $653 million ($2.19) in fiscal 2005. Balance sheet and cash flow strengthened meaningfully. Operating cash flow rose to $2.7 billion from $1.5 billion, aided by better inventory alignment, and the debt-to-capital ratio fell to 14.4% from 18.7%. Net debt was negative (net cash position). The company paid $960 million into escrow to settle the main HBOC-related securities class action, leaving a $1.0 billion accrual, and repurchased $958 million of stock during the year. The board approved an additional $500 million buyback in April 2006. Key risks for investors include customer concentration (the ten largest customers were about 53% of revenue, and Caremark RX alone about 11%), thin pharmaceutical distribution margins (gross margin of 2.99% in Pharmaceutical Solutions), ongoing manufacturer compensation changes, unresolved securities and product liability litigation, and exposure to healthcare reimbursement policy. Management also flagged a 2007 share-based compensation expense increase under SFAS 123(R) of roughly $0.08 to $0.10 per diluted share.
May 16, 2006
2005
MCKESSON CORP Annual Report, Year Ended Mar 31, 2005
McKesson's fiscal 2005 (year ended March 31, 2005) revenue rose 16% to $80.5 billion, driven by the Pharmaceutical Solutions segment, which generated about 95% of sales. Gross margin fell to 4.30% from 4.67%, mainly from lower pharmaceutical distribution margins and reduced manufacturer price-increase benefits. The company reported a net loss of $156.7 million, or $0.53 per diluted share, after a $1.2 billion pre-tax Securities Litigation charge ($810 million after tax). Excluding that charge, net income would have been $653.3 million, or $2.19 per diluted share, roughly flat with the prior year. The balance sheet is solid. Cash and marketable securities were $1.8 billion against total debt of $1.21 billion, leaving net cash of about $599 million, and the debt-to-capital ratio was 18.7%. The company made no share repurchases in 2005 and had about $209 million remaining under its authorization. The $960 million class action settlement is payable later in 2005, and management does not expect difficulty financing it. The key forward-looking issues are the shift from buy-and-hold and inventory management agreements to fee-based manufacturer compensation, which management expects to complete by mid-2006 with over 80% of manufacturer compensation insulated from price inflation. Customer concentration is high, with the top ten customers at about 50% of revenue and Rite Aid at about 10%. Other risks include the troubled UK NHS payroll contract, with about $114 million invested and no material revenue recognized to date, and a range of remaining litigation, including the Roby employment judgment and government investigations.
May 13, 2005
2004
MCKESSON CORP Annual Report, Year Ended Mar 31, 2004
McKesson's fiscal 2004 10-K (year ended March 31, 2004) shows a company growing revenue rapidly while its margins compressed. Revenues rose 22% to $69.5 billion, driven almost entirely by the Pharmaceutical Solutions segment (over 90% of revenue), but gross margin fell 76 basis points to 4.67% as lower-margin sales to customers' warehouses grew and pricing pressure intensified in pharmaceutical distribution. Net income rose 16% to $646.5 million and diluted EPS rose 16% to $2.19, helped by lower operating expenses as a percentage of revenue, a $66.4 million reversal of Information Solutions customer settlement reserves, and a $23.2 million tax benefit. Return on equity improved to 13.4%, and net debt to net capital employed dropped to 12.9% from 17.7%. The filing is dominated by risk disclosures. The most significant is the restatement-related securities litigation tied to the 1999 HBOC accounting scandal: 91 lawsuits are pending, a trial is scheduled for September 2005, and the company says it cannot predict the outcome, which could include material judgments or settlements. Other notable risks include a $15 million punitive damages judgment (Roby case), an NHS contract in the UK where about $76 million of net assets are at risk of impairment, and the concentration of revenue in large customers (the top ten account for about 50% of revenue, and Rite Aid alone for about 11%). Management reports that disclosure controls are effective, and the company reported no changes in internal control over financial reporting during the quarter. For investors, the story is strong top-line and earnings growth, offset by thin distribution margins, heavy customer concentration, and a long tail of litigation and contract risk that management has not quantified.
Jun 10, 2004
2003
MCKESSON CORP Annual Report, Year Ended Mar 31, 2003
McKesson Corporation's fiscal 2003 (year ended March 31, 2003) results show strong top-line growth and improving profitability. Revenues rose 14.3% to $57.1 billion, driven almost entirely by the Pharmaceutical Solutions segment (93% of revenue), which grew to $53.2 billion. Diluted EPS increased to $1.88 from $1.43, net income rose to $555.4 million from $418.6 million, and return on stockholders' equity improved to 13.3% from 11.4%. Gross margin on total revenues slipped to 5.43% from 5.58%, largely due to mix shift toward lower-margin pharmaceutical distribution, while operating expenses as a share of revenue fell to 3.80% from 4.18%. Operating cash flow more than doubled to $695.5 million, and the debt-to-capital ratio improved to 21.6%. The filing's most significant risk for investors is litigation tied to the 1999 HBO & Company (HBOC) accounting restatement. As of April 29, 2003, 91 lawsuits had been filed, including a consolidated federal securities class action, ERISA claims, and state actions, alongside ongoing U.S. Attorney and SEC investigations. Management states it cannot predict the outcome or estimate potential losses, and warns that adverse results could be material. Customer concentration is also elevated: the ten largest customers account for about 50% of revenue, and Rite Aid alone accounts for about 12%. The Information Solutions segment returned to profitability, with operating profit of $94.4 million versus $21.7 million a year earlier, though it still carries a $51.0 million provision for expected losses on five international contracts. The company also completed the A.L.I. Technologies acquisition for $347 million and sold a marketing fulfillment business. Its credit ratings (BBB/Baa2) carry a negative outlook.
Jun 6, 2003
2002
MCKESSON CORP Annual Report, Year Ended Mar 31, 2002
McKesson Corporation's 2002 10-K filing reveals a company focused on its three core segments: Pharmaceutical Solutions, Medical-Surgical Solutions, and Information Solutions. The Pharmaceutical Solutions segment is the dominant revenue driver, accounting for 93% of total revenues, and demonstrated significant growth in the fiscal year ended March 31, 2002. Despite the overall revenue increase, the company faced substantial legal challenges stemming from past accounting improprieties related to the HBOC acquisition, with numerous securities litigation cases ongoing. Management highlighted efforts to manage expenses and improve operational efficiency across its segments.
Jun 12, 2002
2001
MCKESSON CORP Annual Report, Year Ended Mar 31, 2001
McKesson HBOC's fiscal 2001 10-K (year ended March 31, 2001) shows a company whose core distribution business grew strongly while earnings were hit hard by unusual charges. Revenue rose 14.5% to $42.0 billion, driven by the Health Care Supply Management segment (98% of sales), which grew operating profit about 16% excluding unusual items and benefited from margin initiatives and higher sales to retail chains and institutions. Reported results were weak: the company posted a net loss of $48.3 million, or $(0.17) per share, versus net income of $723.7 million in fiscal 2000 (which included a large one-time gain on the Water Products sale). Pre-tax unusual items of $458.3 million, including restructuring of the former iMcKesson unit, $161.1 million in customer settlements in Health Care Information Technology, and $105.6 million in investment impairments, drove the loss. Income from continuing operations before unusual items rose 7% to $283.0 million. The Health Care Information Technology segment deteriorated sharply, with revenue down 9% to $930 million and operating profit nearly eliminated ($0.5 million). Balance sheet and liquidity were stable but strained: total debt was $1.23 billion, stockholders' equity was $3.49 billion, and the net debt-to-capital ratio rose to 17.5% from 14.8%. Credit ratings (BBB/Baa2) were on negative outlook. The most significant risk for investors is the accounting litigation stemming from the 1999 HBOC restatement: 85 lawsuits are pending, along with government investigations, and management says it cannot estimate the potential loss, which could be material. Customer concentration is also high, with the top ten customers at about 57% of revenue and Rite Aid alone at about 16%.
Jun 1, 2001
2000
MCKESSON CORP Annual Report, Year Ended Mar 31, 2000
McKesson HBOC's fiscal 2000 10-K (year ended March 31, 2000) shows revenue of $36.7 billion, up 22% from $30.0 billion, driven almost entirely by the Health Care Supply Management segment (about 97% of sales). Reported net income of $723.7 million, or $2.57 diluted EPS, is inflated by a $515.9 million after-tax gain on the February 2000 sale of Water Products and $259 million of pre-tax gains on equity investments (largely Healtheon/WebMD). Income from continuing operations was only $184.6 million ($0.66 per share), and before unusual items it fell 23% to $265.0 million. Operating profit margins compressed as gross margin in distribution declined, and the Health Care Information Technology segment saw revenue fall 22% to $1.2 billion with operating profit down about 31%. Balance sheet and cash flow results are mixed. Operating cash flow was negative $416 million, driven by working capital build, receivables, and inventory growth, and the $400 million receivables sale from the prior year was not repeated. Total debt rose to $1.26 billion, and the net debt-to-capital ratio improved to 14.8% after the Water Products proceeds. The senior debt ratings (BBB / Baa2) are on negative outlook. Rite Aid accounts for roughly 15% of revenue, and the ten largest customers about 52%, a meaningful concentration risk. The dominant investor concern is the HBOC accounting restatement. As of June 1, 2000, 79 lawsuits were pending, along with SEC and U.S. Attorney investigations, and management says it cannot estimate potential losses. Any adverse outcome could be material. The filing also discloses ongoing antitrust exposure from pharmacy class actions and FoxMeyer-related litigation seeking at least $400 million in damages.
Jun 13, 2000
1999-A
MCKESSON CORP Annual Report (Amendment), Year Ended Mar 31, 1999
This filing is a Form 10-K/A amendment by McKesson HBOC, Inc. (MCK) for the fiscal year ended March 31, 1999, filed October 12, 1999. It does not contain the company's full annual financial statements, business discussion, or risk factors. Its sole purpose is to attach the Form 11-K annual report (Exhibit 99.4) for the McKesson HBOC, Inc. Profit Sharing Investment Plan, which was formed by merging the McKesson and HBO & Company employee profit-sharing plans effective April 1, 1999. The amendment also lists the exhibit index for the broader 10-K, including merger agreements with HBO & Company (dated October 17, 1998), employment and compensation plans, a credit agreement with Bank of America, and financial data schedules. The attached 11-K covers the predecessor HBO & Company Profit Sharing and Savings Plan. Net assets available for benefits were $254.3 million at March 31, 1999, up from $249.7 million at December 31, 1998. The McKesson HBOC common stock fund was the largest single holding at $73.2 million, or about 29% of plan assets. That fund suffered $19.4 million of unrealized depreciation in the quarter, and the plan's auditors note a significant subsequent decline in MCK's share price after quarter-end. For investors, this filing carries little direct financial information about McKesson HBOC as a company. The most relevant signals are the concentration of employee retirement assets in company stock and the post-merger stock price weakness, which was tied to the accounting issues at HBOC that surfaced in 1999. Investors seeking revenue, earnings, or balance sheet data should review the original 10-K for fiscal 1999 rather than this amendment.
Oct 12, 1999
1997
MCKESSON CORP Annual Report, Year Ended Mar 31, 1997
McKesson's fiscal 1997 (year ended March 31, 1997) was a transformational year. Revenues rose 29% to $12.9 billion, driven largely by the November 1996 FoxMeyer pharmaceutical distribution acquisition (about $598 million) and the February 1997 General Medical acquisition (about $775 million). Net income was $133.9 million, or $2.98 per fully diluted share, but this figure is flattered by a $120.2 million after-tax gain on the sale of Armor All. Income from continuing operations was only $5.1 million, reflecting $147.0 million of pre-tax unusual items, mainly FoxMeyer distribution-center consolidation and integration charges, a $48.2 million in-process technology write-off from Automated Healthcare, and a $15.1 million receivables reserve. Before unusual items, continuing income fell about 5% to $114.6 million, which management attributes to the temporary dilution from the acquisitions. The balance sheet shifted materially. Total assets nearly doubled to $5.17 billion, and total debt rose to $985 million. Including the $200 million trust convertible preferred securities, the debt-to-capital ratio reached 40.4%, and management reports a net debt-to-capital ratio of 34%. Cash and marketable securities fell to $230 million. Management targets 20% EPS growth, ROE above 15%, and a debt-to-total-capital ratio of 40% to 50%, and expects the acquisitions to be accretive in fiscal 1998. The company is also consolidating roughly 22 distribution centers, with seven closed by March 31, 1997. Investors should weigh the strategic logic, which centers on health care supply management and the institutional and alternate-site markets, against the execution risk. Integration costs, thin operating margins (0.7% reported, 1.8% before unusual items), and significant litigation exposure, including a $400 million+ FoxMeyer suit and antitrust class actions, all bear on the outlook. The filing shows margin recovery is expected to depend on successful consolidation over the next two years.
Jun 19, 1997
1996-A
MCKESSON CORP Annual Report (Amendment), Year Ended Mar 31, 1996
McKesson's amended fiscal 1996 10-K/A (year ended March 31, 1996) restates results to present Armor All and Service Merchandising as discontinued operations, following the December 31, 1996 sale of its 55% Armor All stake to The Clorox Company and the decision to divest Service Merchandising. On a continuing-operations basis, fiscal 1996 revenues rose 5.5% to $9.95 billion, driven almost entirely by volume growth in Health Care Services, which generated 97% of revenue. Income from continuing operations was $120.7 million ($2.59 per fully diluted share), up about 38% from the prior year's $87.5 million before unusual items. Total net income was $135.4 million ($2.90 per share), including $14.7 million from discontinued operations. Operating margin improved to 2.4% from 2.0% excluding unusual items, reflecting cost control, though competitive pressure compressed selling margins in the U.S. distribution business. The balance sheet remained solid. Total debt was $471 million, a 30.7% debt-to-capital ratio, and cash plus marketable securities totaled $456 million. The company had $250 million of unused credit capacity and an investment-grade rating (S&P A+, Moody's A2). Working capital rose to 8.2% of revenues, largely because of a $239.6 million inventory build aimed at securing favorable vendor purchase terms. Share repurchases of 1.35 million shares for $63 million were completed, and a new authorization for 3.5 million additional shares was announced in May 1996. Investors should weigh the subsequent events in the filing. In fiscal 1997 McKesson acquired FoxMeyer's healthcare distribution business for roughly $23 million in cash plus about $500 million in secured debt payoff and $75 million of assumed liabilities, and it bought Automated Healthcare for $61.4 million. The company also faces a pending antitrust class action brought by retail pharmacies over brand-name drug pricing, which management believes it can defend. The Armor All sale produced an after-tax gain of $120.2 million.
Feb 13, 1997
1996
MCKESSON CORP Annual Report, Year Ended Mar 31, 1996
McKesson Corporation's fiscal 1996 10-K (year ended March 31, 1996) describes a company restructured after the July 1994 spin-off of its pharmaceutical benefits management business (PCS), which was sold to Eli Lilly for approximately $4 billion and is reported as a discontinued operation. The continuing company is organized around four segments: Health Care Services (the core, centered on pharmaceutical wholesale distribution in the U.S. and Canada, plus a 22.7% stake in Nadro of Mexico, the Pharmaceutical Services Group, and Sunmark/Zee Medical/Automated Healthcare), Service Merchandising (Millbrook), Water Products (Sparkletts and Alhambra bottled water), and Armor All (55%-owned automotive and home care products). Management is explicitly tilting the company toward health care, with fiscal 1996 acquisitions including Ogden BioServices (renamed McKesson Bioservices) and Automated Healthcare, and internal technology investments such as OmniLink, CareMax, BidLink, and SupplyNET. The filing is notable for capital return and concentration risk. The company repurchased 1.35 million shares for $63 million in fiscal 1996, substantially completed an initial 3.5 million share buyback, and on May 31, 1996 authorized a new repurchase of another 3.5 million shares. Wal-Mart accounted for 11% of consolidated revenues in fiscal 1996, and the Health Care Services wholesale business requires large inventories financed substantially by related payables. Shares outstanding were roughly 42.9 million as of June 3, 1996, with non-affiliate market value of about $1.45 billion. The main legal and environmental exposures are a set of antitrust class actions by retail pharmacies alleging brand-name drug price fixing, in which the company was granted summary judgment in MDL 997 and faces remaining cases that it says it will defend vigorously. Under a judgment-sharing agreement, manufacturers indemnify wholesalers above $1 million per defendant. Environmental reserves cover roughly $24 million for five former chemical-operation sites and about $4 million for Superfund and other matters. Management believes none of these matters will have a material adverse effect. The financial figures themselves are incorporated by reference to the Appendix and were not included in the excerpt provided, so this summary does not cite specific revenue, earnings, or margin numbers.
Jun 19, 1996