01—Abstract
Summary
Summary of the 10-K filed May 7, 2013. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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.
02—Key points
Key Highlights
- McKesson reported stable revenues of $122.455 billion for the fiscal year ended March 31, 2013, largely driven by its Distribution Solutions segment.
- Gross profit increased by 6% year-over-year, with gross profit margin improving to 5.70% due to higher generics income, acquisitions, and buy margins.
- The company actively repurchased its common stock, with a total authorization of $1.1 billion outstanding at March 31, 2013, indicating a commitment to shareholder returns.
- Significant acquisitions were made, including PSS World Medical for approximately $1.9 billion, aimed at expanding its Medical-Surgical business.
- The Technology Solutions segment saw revenue growth, though it faced impairment charges related to software products.
- McKesson highlighted its ongoing participation in legal proceedings, particularly concerning Average Wholesale Price (AWP) litigation, with several state settlements reached during the fiscal year.
- The company maintained effective internal controls over financial reporting, as audited by Deloitte & Touche LLP.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, McKesson Corp kept $0.01.
- Revenue$122.20B100.0%
- Cost of revenue−$115.31B94.4%
- Gross profit$6.88B5.6%
- Operating costs−$4.53B3.7%
- Operating income$2.35B1.9%
- Interest, other & tax−$1.01B0.8%
- Net income$1.34B1.1%
Where FY2013 revenue went
$122.20B- Cost of revenue: $115.31B, 94% of revenue
- Net income: $1.34B, 1.1% of revenue
- R&D: $433.0M, 0.4% of revenue
- SG&A: $4.11B, 3.4% of revenue
- Interest, other & tax: $1.01B, 0.8% of revenue
Kept 1.1% as net incomeNet income $1.34B · 1.1%R&D $433.0M · 0.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed May 7, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $122.20B$122.32B | −0.1% |
| Cost of Revenue | $115.31B$115.92B | −0.5% |
| Gross Profit | $6.88B$6.40B | +7.5% |
| R&D Expenses | $433.00M$402.00M | +7.7% |
| SG&A Expenses | $4.11B$3.73B | +10.3% |
| Operating Expenses | $4.53B$4.28B | +6.0% |
| Operating Income | $2.35B$2.12B | +10.5% |
| Net Income | $1.34B$1.40B | −4.6% |
| EPS (Basic) | $5.71$5.70 | +0.2% |
| EPS (Diluted) | $5.59$5.59 | 0.0% |
| Shares Outstanding (Basic) | 235.00M246.00M | −4.5% |
| Shares Outstanding (Diluted) | 239.00M251.00M | −4.8% |
05—Questions
Frequently Asked Questions
What were McKesson's primary sources of revenue in fiscal year 2013?
McKesson's primary source of revenue was its Distribution Solutions segment, which accounted for approximately 97% of its consolidated revenues. This segment includes the distribution of pharmaceuticals and medical-surgical supplies.
How did McKesson manage its debt and liquidity?
McKesson funded its operations through a combination of operating cash flow, an accounts receivable sales facility, a revolving credit facility, and commercial paper issuances. The company reported a debt-to-capital ratio of 40.8% at March 31, 2013, and maintained adequate liquidity to meet its financial needs.
What were the key acquisitions made by McKesson during the fiscal year?
During fiscal year 2013, McKesson acquired PSS World Medical, Inc. for approximately $1.9 billion, which expanded its Medical-Surgical business. In fiscal year 2012, it acquired substantially all of the assets of Drug Trading Company Limited and Medicine Shoppe Canada Inc. for $925 million, strengthening its Canadian operations.
What significant legal or regulatory challenges did McKesson face?
McKesson was involved in several legal proceedings, most notably Average Wholesale Price (AWP) litigation and various government investigations. While the company had established reserves and settlements were reached in some cases, these proceedings represented potential financial and operational risks.
06—Continue