MCKESSON CORP

Previous wording

•International is a reportable segment that includes our operations in Canada and Norway, bringing together non-U.S.-based drug distribution services, specialty pharmacy, retail, and infusion care services. Our Canadian operations deliver medicines, supplies, and information technology solutions throughout Canada and include Rexall Health retail pharmacies. Our Norwegian operations provide distribution and services to wholesale and retail customers in Norway where we own, partner, or franchise with retail pharmacies. In the second quarter of fiscal 2025, we entered into an agreement to sell our Rexall and Well.ca businesses in Canada (“Canadian retail disposal group”). These divestitures are further described in the “Canadian Divestiture Activities” section below.

Current wording

•International is a reportable segment that includes our operations in Canada and Norway, bringing together non-U.S.-based drug distribution services, specialty pharmacy, retail, and infusion care services. Our Canadian operations deliver medicines, supplies, and information technology solutions throughout Canada and included Rexall Health retail pharmacies. Our Norwegian operations provide distribution and services to wholesale and retail customers in Norway where we own, partner, or franchise with retail pharmacies. During the nine months ended December 31, 2024, we completed the sale of Rexall and Well.ca businesses in Canada (“Canadian retail disposal group”). This divestiture is further described in the “Canadian Divestiture Activities” section below.

Previous wording

On September 5, 2024, we announced an agreement to sell our Canadian retail disposal group. The adjusted purchase price is approximately $148 million. We recorded a charge of $643 million for the three and six months ended September 30, 2024 in total operating expenses to remeasure the Canadian retail disposal group to fair value less costs to sell. The remeasurement adjustment includes a $15 million loss related to the accumulated other comprehensive loss balances associated with the disposal group. The transaction is anticipated to close in the second half of fiscal 2025, pursuant to the satisfaction of customary closing conditions, including receipt of regulatory approvals, as applicable.

Current wording

On December 30, 2024, we completed the sale of our Canadian retail disposal group for an adjusted purchase price consisting of a cash payment of $9 million, received upon closing, and a note of $120 million, measured at fair value and accruing interest upon satisfaction of certain conditions, and payable to the Company at the end of six years. We recorded a charge of $666 million for the nine months ended December 31, 2024 in total operating expenses to remeasure the Canadian retail disposal group to fair value less costs to sell. The remeasurement adjustment includes a $48 million loss related to the accumulated other comprehensive loss balances associated with the disposal group. Refer to Financial Note 2, “Business Acquisitions and Divestitures,", to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

Previous wording

The following summary provides highlights and key factors that impacted our business, operating results, financial condition, and liquidity for the three and six months ended September 30, 2024:

Current wording

The following summary provides highlights and key factors that impacted our business, operating results, financial condition, and liquidity for the three and nine months ended December 31, 2024:

Previous wording

•For the three months ended September 30, 2024 compared to the prior year period, revenues increased by 21%, gross profit increased by 6%, total operating expenses increased by 26%, and other income, net increased by $8 million;

Current wording

•For the three months ended December 31, 2024 compared to the prior year period, revenues increased by 18%, gross profit increased by 4%, total operating expenses decreased by 18%, and other income, net increased by $35 million;

Previous wording

•For the six months ended September 30, 2024 compared to the prior year period, revenues increased by 14%, gross profit increased by 5%, total operating expenses increased by 19%, and other income, net increased by $100 million. Refer to the “Overview of Consolidated Results” section below for an analysis of these changes;

Current wording

•For the nine months ended December 31, 2024 compared to the prior year period, revenues increased by 15%, gross profit increased by 5%, total operating expenses increased by 5%, and other income, net increased by $135 million. Refer to the “Overview of Consolidated Results” section below for an analysis of these changes;

Previous wording

•Diluted earnings per common share attributable to McKesson Corporation decreased to $1.87 from $4.92 for the three months ended September 30, 2024 and decreased to $8.89 from $11.95 for the six months ended September 30, 2024 compared to the respective prior year periods;

Current wording

•Diluted earnings per common share attributable to McKesson Corporation increased to $6.95 from $4.42 for the three months ended December 31, 2024 and decreased to $15.80 from $16.39 for the nine months ended December 31, 2024 compared to the respective prior year periods;

Previous wording

•In the second quarter of fiscal 2025, we onboarded a new strategic partner within our U.S. Pharmaceutical segment;

Current wording

•During the nine months ended December 31, 2024, we onboarded a new strategic partner within our U.S. Pharmaceutical segment;

Previous wording

•Total operating expenses for the three and six months ended September 30, 2024 includes fair value remeasurement charges of $643 million related to our Canadian retail disposal group;

Current wording

•On December 30, 2024, we completed the sale of our Canadian retail disposal group and total operating expenses for the nine months ended December 31, 2024 includes fair value remeasurement charges of $666 million;

Previous wording

•For the three and six months ended September 30, 2024, we recorded a restructuring charge of $227 million related to an enterprise-wide initiative to drive operational efficiencies as further described in the “Restructuring Initiatives” section of “Overview of Consolidated Results” below;

Current wording

•For the three and nine months ended December 31, 2024, we recorded restructuring charges of $18 million and $245 million, respectively, related to an enterprise-wide initiative to drive operational efficiencies as further described in the “Restructuring Initiatives” section of “Overview of Consolidated Results” below;

Previous wording

•For the six months ended September 30, 2024, we recognized a net discrete tax benefit of $150 million, including $58 million related to an election to change the tax status of a foreign affiliate;

Current wording

•For the nine months ended December 31, 2024, we recognized a net discrete tax benefit of $134 million, including $58 million related to an election to change the tax status of a foreign affiliate;

Previous wording

•For thesix months ended September 30, 2024, we recorded a net charge of$108 million related to our estimated liability for opioid-related claims, as further described in the Opioid-Related Litigation and Claims section of “Trends and Uncertainties” below;

Current wording

•For thenine months ended December 31, 2024, we recorded a net charge of $108 million related to our estimated liability for opioid-related claims, as further described in the Opioid-Related Litigation and Claims section of “Trends and Uncertainties” below;

Previous wording

•For thesix months ended September 30, 2024, we recognized a net gain of $100 million related to a recapitalization event of one of our investments in equity securities which resulted in an increase to the carrying value of this investment;

Current wording

•For thenine months ended December 31, 2024, we recognized a net gain of $100 million related to a recapitalization event of one of our investments in equity securities which resulted in an increase to the carrying value of this investment;

Previous wording

•For the three and six months ended September 30, 2024, we received $63 million and $153 million, respectively, related to our share of antitrust legal settlements. These amounts were recorded as a gain within “Cost of sales” in the Condensed Consolidated Statements of Operations within our U.S. Pharmaceutical segment;

Current wording

•For the three and nine months ended December 31, 2024, we received $31 million and $184 million, respectively, related to our share of antitrust legal settlements. These amounts were recorded as a gain within “Cost of sales” in the Condensed Consolidated Statements of Operations within our U.S. Pharmaceutical segment;

Previous wording

•During the three months ended September 30, 2024, we utilized the net proceeds from the issuance of the 2029 Notes, along with cash on hand, to redeem our $500 million outstanding principal amount of 5.25% Notes due February 15, 2026 (the “2026 Notes”) prior to maturity;

Current wording

•During the nine months ended December 31, 2024, we utilized the net proceeds from the issuance of the 2029 Notes, along with cash on hand, to redeem our $500 million outstanding principal amount of 5.25% Notes due February 15, 2026 (the “2026 Notes”) prior to maturity;

Previous wording

•During the six months ended September 30, 2024, we returned $2.2 billion of cash to shareholders through $2.0 billion of common stock repurchases in open market transactions and $162 million of dividend payments. In July 2024, our Board of Directors (the “Board”) approved an increase of $4.0 billion in the authorization for repurchase of the Company’s common stock and raised our quarterly dividend to $0.71 from $0.62 per share of common stock. The total remaining authorization outstanding for repurchases of the Company’s common stock at September 30, 2024 was $8.6 billion; and

Current wording

•During the nine months ended December 31, 2024, we returned $3.1 billion of cash to shareholders through $2.8 billion of common stock repurchases in open market transactions and $254 million of dividend payments. In July 2024, our Board of Directors (the “Board”) approved an increase of $4.0 billion in the authorization for repurchase of the Company’s common stock and raised our quarterly dividend to $0.71 from $0.62 per share of common stock. The total remaining authorization outstanding for repurchases of the Company’s common stock at December 31, 2024 was $7.8 billion;

Previous wording

•On August 26, 2024, we announced a definitive agreement to acquire a 70% controlling interest in Community Oncology Revitalization Enterprise Ventures, LLC (“Core Ventures”), an internal business and administrative services organization established by Florida Cancer Specialists & Research Institute, LLC, for approximately $2.49 billion cash, subject to certain customary adjustments. Following the completion of the transaction, Core Ventures will be part of the Oncology platform, and financial results will be reported within our U.S. Pharmaceutical segment. The transaction is subject to customary closing conditions, including required regulatory clearance. On November 6, 2024, we received a request for additional information and documentary materials from the Federal Trade Commission (the “FTC”) in connection with the FTC’s review of our proposed acquisition of Core Ventures. We will respond promptly and continue to work cooperatively with the FTC staff in connection with its review of the transaction.

Current wording

•On August 26, 2024, we entered into a definitive agreement to acquire a 70% controlling interest in Community Oncology Revitalization Enterprise Ventures, LLC (“Core Ventures”), an internal business and administrative services organization established by Florida Cancer Specialists & Research Institute, LLC, for approximately $2.49 billion cash, subject to certain customary adjustments. Following the completion of the transaction, Core Ventures will be part of the Oncology platform, and financial results will be reported within our U.S. Pharmaceutical segment. The transaction is subject to customary closing conditions, including required regulatory clearance. On November 6, 2024, we received a request for additional information and documentary materials from the Federal Trade Commission (the “FTC”) in connection with the FTC’s review of our proposed acquisition of Core Ventures. We will respond promptly and continue to work cooperatively with the FTC staff in connection with its review of the transaction; and

Previous wording

During the three months ended September 30, 2024, we made payments totaling $500 million associated with various settlement agreements for opioid-related claims of states, subdivisions, and Native American tribes. Our total estimated liability for opioid-related claims was $6.4 billion as of September 30, 2024, of which $775 million was included within “Other accrued liabilities” for the amount estimated to be paid within the next twelve months, and the remaining liability was included in “Long-term litigation liabilities” in our Condensed Consolidated Balance Sheet.

Current wording

During the nine months ended December 31, 2024, we made payments totaling $500 million associated with various settlement agreements for opioid-related claims of states, subdivisions, and Native American tribes. Our total estimated liability for opioid-related claims was $6.4 billion as of December 31, 2024, of which $775 million was included within “Other accrued liabilities” for the amount estimated to be paid within the next twelve months, and the remaining liability was included in “Long-term litigation liabilities” in our Condensed Consolidated Balance Sheet.

Previous wording

In October 2023, our customer Rite Aid Corporation (including certain of its subsidiaries, “Rite Aid”) filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. Consequently, we recorded a provision for bad debts totaling $725 million during the year ended March 31, 2024, of which $210 million was recorded in the second quarter of fiscal 2024 representing the uncollected trade accounts receivable balance from Rite Aid as of September 30, 2023.

Current wording

In October 2023, our customer Rite Aid Corporation (including certain of its subsidiaries, “Rite Aid”) filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. Consequently, during the second quarter of fiscal 2024, we recorded a provision for bad debts of $210 million, which represented the uncollected trade accounts receivable balance as of September 30, 2023 due from Rite Aid. During the nine months ended December 31, 2023, we recorded a provision for bad debts totaling $725 million, of which $515 million was recorded in the third quarter of fiscal 2024 representing the uncollected trade accounts receivable from sales to Rite Aid through October 2023 prior to its bankruptcy petition filing.

Previous wording

Rite Aid's restructuring plan was approved by the court and the company successfully emerged from bankruptcy in August 2024. During the three and six months ended September 30, 2024, we reassessed our initial estimates made in conjunction with the previously reserved prepetition balances, including cash received during the period, resulting in a reversal of $203 million recorded within “Selling, distribution, general, and administrative expenses” in our Condensed Consolidated Statements of Operations and included in our U.S. Pharmaceutical segment. During the three and six months ended September 30, 2024, we released $237 million of allowance for doubtful accounts against trade accounts receivables, representing the write-off of uncollectible receivables related to the Rite Aid provision in the Condensed Consolidated Balance Sheet.

Current wording

Rite Aid's restructuring plan was approved by the court and the company successfully emerged from bankruptcy in August 2024. During the nine months ended December 31, 2024, we reassessed our initial estimates made in conjunction with the previously reserved prepetition balances, including cash received during the period, resulting in a reversal of $203 million recorded within “Selling, distribution, general, and administrative expenses” in our Condensed Consolidated Statements of Operations and included in our U.S. Pharmaceutical segment. During the nine months ended December 31, 2024, we released $237 million of allowance for doubtful accounts against trade accounts receivables, representing the write-off of uncollectible receivables related to the Rite Aid provision in the Condensed Consolidated Balance Sheet.