10-KPeriod: FY2001

MCKESSON CORP Annual Report, Year Ended Mar 31, 2001

Filed June 1, 2001For Securities:MCK

Summary

McKesson HBOC, Inc. (now McKesson Corporation) in its 2001 10-K filing presents a robust picture of its operations, primarily driven by its Health Care Supply Management segment, which generated over 96% of its $42.0 billion in sales for fiscal year 2001. This segment is a leading distributor of pharmaceuticals and medical-surgical supplies across North America, serving diverse customer bases including retail pharmacies, hospitals, and alternate care sites. The company leverages advanced logistics, information technology, and a network of distribution centers to maintain a competitive edge. The Health Care Information Technology segment, while smaller, contributes significantly through a wide array of software solutions and services for providers and payors, aiming to improve patient care, financial management, and operational efficiency. The company demonstrates a commitment to innovation and product development in this segment, evidenced by substantial R&D expenditures. However, the IT segment also faces significant litigation stemming from past accounting irregularities related to prior HBOC acquisitions, with a substantial number of lawsuits filed and ongoing investigations by regulatory bodies.

Key Highlights

  • 1Dominant Health Care Supply Management segment with $41.1 billion in sales, representing 98% of total revenue.
  • 2Extensive distribution network and advanced logistics systems (Acumax® Plus) support pharmaceutical and medical-surgical supply chains.
  • 3Diversified Health Care Information Technology offerings include patient care, financial, and networking software solutions.
  • 4Significant investment in Research & Development for the IT segment, representing 16% of segment revenue in fiscal year 2001.
  • 5Company is subject to extensive litigation related to accounting irregularities from prior HBOC acquisitions, with ongoing legal proceedings and investigations.
  • 6McKesson HBOC, Inc. is described as the world's largest health care service and technology company.
  • 7Significant customer concentration, with the top ten customers accounting for 57% of revenue, and Rite Aid Corporation representing 16%.

Frequently Asked Questions

McKesson HBOC, Inc. operates through two main segments: Health Care Supply Management and Health Care Information Technology. The Health Care Supply Management segment is the dominant revenue generator, focusing on the distribution of pharmaceuticals, medical-surgical supplies, and health and beauty care products. The Health Care Information Technology segment provides software solutions and services for patient care, financial management, and networking within the healthcare industry.

The company is involved in extensive 'Accounting Litigation' stemming from the 1999 integration of HBOC, involving numerous federal and state lawsuits. While the company does not believe it is feasible to predict the outcome or estimate the range of loss, the proceedings could result in substantial payments, potentially having a material adverse impact on the company's financial position, results of operations, and cash flows. Investigations by the U.S. Attorney's Office and the SEC are also ongoing.

The company's customer base exhibits significant concentration. For the fiscal year ended March 31, 2001, sales to the ten largest customers accounted for approximately 57% of the company's total revenues. The largest single customer, Rite Aid Corporation, represented approximately 16% of the company's revenues, indicating a reliance on a few key partners.

The Health Care Information Technology segment has a notable commitment to R&D, considered important for its long-term success. In fiscal year 2001, this segment expended $152.5 million on R&D activities, which represented 16% of its revenue. This indicates a strategic focus on innovation within its technology offerings.