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Table of Contents                                          
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 1-13252
mck-20220930_g1.jpg
McKESSON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware94-3207296
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
6555 State Hwy 161,
Irving, TX 75039
(Address of principal executive offices, including zip code)
(972) 446-4800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
(Title of each class)(Trading Symbol)(Name of each exchange on which registered)
Common stock, $0.01 par valueMCKNew York Stock Exchange
1.500% Notes due 2025MCK25New York Stock Exchange
1.625% Notes due 2026MCK26New York Stock Exchange
3.125% Notes due 2029MCK29New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer 
Non-accelerated filer Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 141,793,480 shares of the issuer’s common stock were outstanding as of September 30, 2022.


McKESSON CORPORATION

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2

McKESSON CORPORATION

PART I—FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
 
Three Months Ended September 30, Six Months Ended September 30,
 2022202120222021
Revenues$70,157 $66,576 $137,311 $129,250 
Cost of sales(67,062)(63,224)(131,193)(122,866)
Gross profit3,095 3,352 6,118 6,384 
Selling, distribution, general, and administrative expenses(1,950)(2,669)(3,909)(4,901)
Claims and litigation charges, net9 (112)4 (186)
Restructuring, impairment, and related charges, net(30)(32)(53)(190)
Total operating expenses(1,971)(2,813)(3,958)(5,277)
Operating income1,124 539 2,160 1,107 
Other income, net175 139 190 182 
Loss on debt extinguishment (191) (191)
Interest expense(55)(45)(100)(94)
Income from continuing operations before income taxes1,244 442 2,250 1,004 
Income tax expense(271)(132)(470)(158)
Income from continuing operations973 310 1,780 846 
Loss from discontinued operations, net of tax(6) (4)(3)
Net income967 310 1,776 843 
Net income attributable to noncontrolling interests(41)(43)(82)(90)
Net income attributable to McKesson Corporation$926 $267 $1,694 $753 
Earnings (loss) per common share attributable to McKesson Corporation
Diluted
Continuing operations
$6.46 $1.71 $11.71 $4.82 
Discontinued operations
(0.04) (0.03)(0.02)
Total
$6.42 $1.71 $11.68 $4.80 
Basic
Continuing operations
$6.51 $1.73 $11.81 $4.87 
Discontinued operations
(0.04) (0.02)(0.02)
Total
$6.47 $1.73 $11.79 $4.85 
Weighted-average common shares outstanding
Diluted144.1 155.8 145.0 156.9 
Basic143.1 154.1 143.7 155.1 

See Financial Notes
3

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 
 Three Months Ended September 30, Six Months Ended September 30,
 2022202120222021
Net income$967 $310 $1,776 $843 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
(192)(48)390 (24)
Unrealized gains on cash flow hedges18 8 36 8 
Changes in retirement-related benefit plans
2 2 38 4 
Other comprehensive income (loss), net of tax(172)(38)464 (12)
Comprehensive income795 272 2,240 831 
Comprehensive income attributable to noncontrolling interests(35)(43)(126)(93)
Comprehensive income attributable to McKesson Corporation$760 $229 $2,114 $738 

See Financial Notes
4

McKESSON CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)
(Unaudited)
September 30, 2022March 31, 2022
ASSETS
Current assets
Cash and cash equivalents$2,916 $3,532 
Receivables, net20,109 18,583 
Inventories, net19,876 18,702 
Assets held for sale2,825 4,516 
Prepaid expenses and other722 898 
Total current assets46,448 46,231 
Property, plant, and equipment, net2,071 2,092 
Operating lease right-of-use assets1,548 1,548 
Goodwill9,239 9,451 
Intangible assets, net1,872 2,059 
Other non-current assets1,903 1,917 
Total assets$63,081 $63,298 
LIABILITIES AND DEFICIT
Current liabilities
Drafts and accounts payable$41,003 $38,086 
Current portion of long-term debt800 799 
Current portion of operating lease liabilities284 297 
Liabilities held for sale1,991 4,741 
Other accrued liabilities4,279 4,543 
Total current liabilities48,357 48,466 
Long-term debt4,813 5,080 
Long-term deferred tax liabilities1,660 1,418 
Long-term operating lease liabilities1,315 1,366 
Long-term litigation liabilities6,644 7,220 
Other non-current liabilities1,541 1,540 
McKesson Corporation stockholders’ deficit
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding
  
Common stock, $0.01 par value, 800 shares authorized, 277 and 275 shares issued at September 30, 2022 and March 31, 2022, respectively
3 2 
Additional paid-in capital7,609 7,275 
Retained earnings10,579 9,030 
Accumulated other comprehensive loss(1,114)(1,534)
Treasury shares, at cost, 135 and 130 shares at September 30, 2022 and March 31, 2022, respectively
(18,844)(17,045)
Total McKesson Corporation stockholders’ deficit(1,767)(2,272)
Noncontrolling interests518 480 
Total deficit(1,249)(1,792)
Total liabilities and deficit$63,081 $63,298 
See Financial Notes
5

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In millions, except per share amounts)
(Unaudited)

Three Months Ended September 30, 2022
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasuryNoncontrolling
Interests
Total
Deficit
SharesAmountCommon SharesAmount
Balance, June 30, 2022
277 $3 $7,350 $9,732 $(948)(133)$(18,141)$532 $(1,472)
Issuance of shares under employee plans, net of forfeitures— — 36 — — — (2)— 34 
Share-based compensation— — 46 — — — — — 46 
Repurchase of common stock— — 177 — — (2)(701)— (524)
Net income— — — 926 — — — 41 967 
Other comprehensive loss— — — — (166)— — (6)(172)
Cash dividends declared, $0.54 per common share
— — — (78)— — — — (78)
Payments to noncontrolling interests— — — — — — — (41)(41)
Reclassification of recurring compensation to other accrued liabilities— — — — — — — (2)(2)
Other— — — (1)— — — (6)(7)
Balance, September 30, 2022
277 $3 $7,609 $10,579 $(1,114)(135)$(18,844)$518 $(1,249)


Three Months Ended September 30, 2021
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasuryNoncontrolling
Interests
Total
 Deficit
SharesAmountCommon SharesAmount
Balance, June 30, 2021
274 $2 $7,057 $8,618 $(1,627)(119)$(14,579)$484 $(45)
Issuance of shares under employee plans, net of forfeitures1 — 40 — — — (1)— 39 
Share-based compensation— — 43 — — — — — 43 
Repurchase of common stock— — 171 — — (3)(451)— (280)
Net income— — — 267 — — — 43 310 
Other comprehensive loss— — — — (38)— — — (38)
Cash dividends declared, $0.47 per common share
— — — (74)— — — — (74)
Payments to noncontrolling interests— — — — — — — (40)(40)
Reclassification of recurring compensation to other accrued liabilities— — — — — — — (2)(2)
Other— — — 1 — — — (1) 
Balance, September 30, 2021
275 $2 $7,311 $8,812 $(1,665)(122)$(15,031)$484 $(87)
See Financial Notes
6

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In millions, except per share amounts)
(Unaudited)

Six Months Ended September 30, 2022
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasuryNoncontrolling
Interests
Total
Deficit
SharesAmountCommon SharesAmount
Balance, March 31, 2022
275 $2 $7,275 $9,030 $(1,534)(130)$(17,045)$480 $(1,792)
Issuance of shares under employee plans, net of forfeitures2 1 127 — — — (154)— (26)
Share-based compensation— — 86 — — — — — 86 
Repurchase of common stock— — 121 — — (5)(1,645)— (1,524)
Net income— — — 1,694 — — — 82 1,776 
Other comprehensive income— — — — 420 — — 44 464 
Cash dividends declared, $1.01 per common share
— — — (145)— — — — (145)
Payments to noncontrolling interests— — — — — — — (77)(77)
Reclassification of recurring compensation to other accrued liabilities— — — — — — — (4)(4)
Other— — — — — — — (7)(7)
Balance, September 30, 2022
277 $3 $7,609 $10,579 $(1,114)(135)$(18,844)$518 $(1,249)


Six Months Ended September 30, 2021
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasuryNoncontrolling
Interests
Total
Equity (Deficit)
SharesAmountCommon SharesAmount
Balance, March 31, 2021
273 $2 $6,925 $8,202 $(1,480)(115)$(13,670)$196 $175 
Issuance of shares under employee plans, net of forfeitures2 — 111 — — — (60)— 51 
Share-based compensation— — 76 — — — — — 76 
Repurchase of common stock— — 21 — — (7)(1,301)— (1,280)
Net income— — — 753 — — — 82 835 
Other comprehensive loss— — — — (15)— — — (15)
Cash dividends declared, $0.89 per common share
— — — (139)— — — — (139)
Payments to noncontrolling interests— — — — — — — (79)(79)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG— — 178 — (170)— — — 8 
Reclassification of McKesson Europe AG redeemable noncontrolling interests— — — — — — — 287 287 
Reclassification of recurring compensation to other accrued liabilities— — — — — — — (2)(2)
Other— — — (4)— — — — (4)
Balance, September 30, 2021
275 $2 $7,311 $8,812 $(1,665)(122)$(15,031)$484 $(87)
See Financial Notes
7

McKESSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Six Months Ended September 30,
 20222021
OPERATING ACTIVITIES
Net income$1,776 $843 
Adjustments to reconcile to net cash provided by operating activities:
Depreciation124 148 
Amortization175 265 
Long-lived asset impairment charges11 127 
Deferred taxes170 (18)
Credits associated with last-in, first-out inventory method(36)(46)
Non-cash operating lease expense126 152 
Gain from sales of businesses and investments(148)(101)
European businesses held for sale(35)470 
Other non-cash items157 381 
Changes in assets and liabilities, net of acquisitions:
Receivables(1,883)(2,311)
Inventories(1,453)(1,164)
Drafts and accounts payable2,292 1,431 
Operating lease liabilities(174)(186)
Taxes82 40 
Litigation liabilities(915)151 
Other(103)(12)
Net cash provided by operating activities166 170 
INVESTING ACTIVITIES
Payments for property, plant, and equipment(157)(186)
Capitalized software expenditures(65)(93)
Acquisitions, net of cash, cash equivalents, and restricted cash acquired(23)(4)
Proceeds from sales of businesses and investments, net496 179 
Other(135)(53)
Net cash provided by (used in) investing activities116 (157)
FINANCING ACTIVITIES
Proceeds from short-term borrowings100 3,020 
Repayments of short-term borrowings(100)(3,020)
Proceeds from issuances of long-term debt 498 
Repayments of long-term debt(4)(1,636)
Payments for debt extinguishments (184)
Common stock transactions:
Issuances127 111 
Share repurchases(1,484)(1,272)
Dividends paid(139)(134)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG (1,031)
Other(253)(246)
Net cash used in financing activities(1,753)(3,894)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash24 18 
Change in cash, cash equivalents, and restricted cash classified within Assets held for sale470  
Net decrease in cash, cash equivalents, and restricted cash(977)(3,863)
Cash, cash equivalents, and restricted cash at beginning of period3,935 6,396 
Cash, cash equivalents, and restricted cash at end of period2,958 2,533 
Less: Restricted cash at end of period included in Prepaid expenses and other
(42)(382)
Cash and cash equivalents at end of period
$2,916 $2,151 
See Financial Notes
8

McKESSON CORPORATION
FINANCIAL NOTES
(UNAUDITED)

1.    Significant Accounting Policies
Nature of Operations: McKesson Corporation (“McKesson,” or the “Company,”) is a diversified healthcare services leader dedicated to advancing health outcomes for patients everywhere. McKesson partners with biopharma companies, care providers, pharmacies, manufacturers, governments, and others to deliver insights, products, and services to help make quality care more accessible and affordable. The Company reports its financial results in four reportable segments: U.S. Pharmaceutical, Prescription Technology Solutions (“RxTS”), Medical-Surgical Solutions, and International. Refer to Financial Note 14, “Segments of Business,” for additional information.
Basis of Presentation: The condensed consolidated financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and therefore do not include all information and disclosures normally included in the annual consolidated financial statements.
The condensed consolidated financial statements of McKesson include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where the Company’s ownership is less than 100%, the portion of the net income or loss allocable to the noncontrolling interests is reported as “Net income attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations. All significant intercompany balances and transactions have been eliminated in consolidation, including the intercompany portion of transactions with equity method investees.
The Company considers itself to control an entity if it is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary of the variable interest entity (“VIE”). The Company consolidates VIEs when it is determined that it is the primary beneficiary of the VIE. Investments in business entities in which the Company does not have control but can exercise significant influence over operating and financial policies are accounted for using the equity method.
Fiscal Period: The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year.
Reclassifications: Certain prior period amounts have been reclassified to conform to the current year presentation.