8-KMaterial Agreements

MCKESSON CORP 8-K Report, Material Agreement (Jun 23, 2005)

Filed June 23, 2005For Securities:MCK

Summary

McKesson Corporation (MCK) announced on June 22, 2005, a significant amendment to its contract with the United Kingdom's National Health Service (NHS). This amendment extends the original ten-year agreement for an additional thirty months, underscoring the ongoing strategic importance of this relationship. The company will receive a substantial cash payment of approximately $143 million (GBP 78.8 million) from the NHS. This payment is primarily intended to reimburse McKesson for its investments made in the Electronic Staff Record system project to date. This development is crucial for investors as it demonstrates McKesson's continued commitment and successful execution of large-scale technology and HR/payroll solutions for major governmental healthcare providers. The extension of the contract provides visibility into future revenue streams and reinforces the company's position as a key partner for the NHS. The financial implications of the cash payment and the extended contract term are positive, suggesting improved project economics and a solidifies the partnership.

Key Highlights

  • 1McKesson Corporation amended its contract with the UK's National Health Service (NHS) on June 22, 2005.
  • 2The amendment extends the existing contract by an additional 30 months.
  • 3The NHS will make a cash payment of approximately $143 million (GBP 78.8 million) to McKesson.
  • 4The payment is primarily to reimburse McKesson for its prior investment in the Electronic Staff Record (ESR) system.
  • 5The amended contract includes an updated implementation plan for the ESR system.
  • 6The terms are substantially similar to a previously disclosed tentative agreement, providing confirmation and finalization of terms.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report the material definitive agreement entered into by McKesson Corporation regarding an amendment to its contract with the United Kingdom's National Health Service (NHS).

McKesson will receive a significant cash payment of approximately $143 million (GBP 78.8 million) from the NHS, which is primarily a reimbursement for the company's investment in the Electronic Staff Record project. Additionally, the 30-month contract extension provides ongoing revenue and service opportunities.

The Electronic Staff Record (ESR) system is an integrated system for managing human resources and payroll for the NHS. McKesson is implementing this system as part of its contract with the UK's healthcare authority.

No, the amendment extends the existing agreement and includes an updated implementation plan. The terms and conditions remain substantially similar to those previously disclosed, indicating a continuation and formalization of the partnership rather than a change in its fundamental nature.