MCKESSON CORP

Overview of Segment Results:

Segment Revenues:

U.S. Pharmaceutical

U.S. Pharmaceutical revenues for the three months ended December 31, 2024 increased $14 billion or 19% compared to the same prior year period. Within the segment, sales to pharmacies and healthcare providers increased $12.6 billion and sales to specialty practices and other increased $1.4 billion. Overall, these increases were primarily due to higher volumes from retail national account customers and growth in specialty pharmaceuticals, partially offset by branded to generic drug conversions.

U.S. Pharmaceutical revenues for the nine months ended December 31, 2024 increased $34.6 billion or 16% compared to the same prior year period. Within the segment, sales to pharmacies and healthcare providers increased $29.8 billion and sales to specialty practices and other increased $4.8 billion. Overall, these increases were primarily due to higher volumes from retail national account customers and growth in specialty pharmaceuticals, partially offset by branded to generic drug conversions.

Prescription Technology Solutions

RxTS revenues for the three months ended December 31, 2024 increased $166 million or 14% compared to the same prior year period due to increased volumes from our third-party logistics and higher technology service revenues.

RxTS revenues for the nine months ended December 31, 2024 increased $288 million or 8% compared to the same prior year period due to increased volumes from our third-party logistics and higher technology service revenues.

Medical-Surgical Solutions

Medical-Surgical Solutions revenues for the three months ended December 31, 2024 decreased $82 million or 3% compared to the same prior year period. Within the segment, sales to primary care customers decreased $96 million driven by lower volumes of illness season testing. This decrease was partially offset by sales to extended care customers and Other sales which increased $9 million and $5 million, respectively.

Medical-Surgical Solutions revenues for the nine months ended December 31, 2024 increased $57 million or 1% compared to the same prior year period. Within the segment, sales to primary care customers increased $63 million and sales to our extended care customers increased $11 million, driven by underlying business growth. These increases were partially offset by Other sales which declined $17 million driven by lower contribution from the kitting and distribution of ancillary supplies used to administer COVID-19 vaccines.

International

International revenues for the three months ended December 31, 2024 increased $221 million or 6% compared to the same prior year period. Within the segment, sales in Canada increased by $311 million primarily driven by higher pharmaceutical distribution volumes and sales in Norway increased by $17 million primarily driven by growth in retail pharmacy. These increases were partially offset by unfavorable effects of foreign currency exchange fluctuations of $107 million.

International revenues for the nine months ended December 31, 2024 increased $678 million or 6% compared to the same prior year period. Within the segment, sales in Canada increased by $831 million primarily driven by higher pharmaceutical distribution volumes and sales in Norway increased by $83 million primarily driven by growth in retail pharmacy. These increases were partially offset by unfavorable effects of foreign currency exchange fluctuations of $236 million.

Corporate

Corporate reflects revenues from services derived in the U.S. related to certain technology operations. The increase compared to the prior year was immaterial.

Corporate reflects revenues from services derived in the U.S. related to certain technology operations. The increase compared to the prior year was immaterial.

Segment Operating Profit (Loss) and Corporate Expenses, Net:

(1)Segment operating profit includes gross profit, net of total operating expenses, as well as other income, net, for our reportable segments.

(2)Operating profit for our U.S. Pharmaceutical segment includes the following:

•a credit of $203 million for the nine months ended December 31, 2024 due to the reassessment of our initial estimates made in conjunction with the previously reserved prepetition balances owed by Rite Aid. We recognized a provision for bad debts of $515 million and $725 million for the three and nine months ended December 31, 2023, respectively, which represented the uncollected trade accounts receivable due from Rite Aid as discussed in the “Trends and Uncertainties” section;

•cash receipts for our share of antitrust legal settlements of $31 million and $23 million for the three months ended December 31, 2024 and 2023, respectively, and $184 million and $220 million for the nine months ended December 31, 2024 and 2023, respectively;

•charges of $89 million and $2 million related to the LIFO method of accounting for inventories for the three months ended December 31, 2024 and 2023, respectively and charges of $85 million and $89 million for the nine months ended December 31, 2024 and 2023, respectively;

•restructuring charges of $67 million for the nine months ended December 31, 2024 for restructuring initiatives as discussed in Financial Note 3, “Restructuring, Impairment, and Related Charges, Net,” to the accompanying condensed consolidated financial statements included in this Quarterly Report;

•a charge of $57 million for the nine months ended December 31, 2024 related to our estimated liability for opioid-related claims as discussed previously in the “Trends and Uncertainties” section; and

•a loss of $43 million for the nine months ended December 31, 2024 related to one of the Company’s equity method investments.

(3)Operating profit for our RxTS segment for the three and nine months ended December 31, 2023 includes gains of $2 million and $78 million, respectively, resulting from fair value adjustments of our contingent consideration liability related to the Rx Savings Solutions, LLC acquisition completed in November 2022.

(4)Operating profit for our Medical-Surgical Solutions segment for the three and nine months ended December 31, 2024 includes restructuring charges of $19 million and$169 million, respectively, related to a broad set of initiatives to drive operational efficiencies and increase cost optimization efforts as discussed in Financial Note 3, “Restructuring, Impairment, and Related Charges, Net,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

(5)Operating profit (loss) for our International segment includes a charge of $11 million and $604 million for the three and nine months ended December 31, 2024, respectively, to remeasure the assets and liabilities of the Canadian retail disposal group to fair value less costs to sell, as discussed in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

(6)Corporate expenses, net includes the following:

•a charge of $12 million and $62 million for the three and nine months ended December 31, 2024, respectively, related to the effect of accumulated other comprehensive loss components from our Canadian retail disposal group, as discussed in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report;

•a net gain of $101 million for the nine months ended December 31, 2024 related to our investments in equity securities of certain U.S. growth stage companies in the healthcare industry, as discussed in Financial Note 9, “Fair Value Measurements,” to the accompanying condensed consolidated financial statements included in this Quarterly Report;

•a net charge of $51 million for the nine months ended December 31, 2024 related to our estimated liability for opioid-related claims as discussed previously in the “Trends and Uncertainties” section; and

•a restructuring charge of $50 million for the nine months ended December 31, 2023 for restructuring initiatives as discussed in Financial Note 3, “Restructuring, Impairment, and Related Charges, Net,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

U.S. Pharmaceutical

Operating profit for this segment increased for the three months ended December 31, 2024 compared to the same prior year period primarily due to a prior year provision for bad debts of $515 million related to the bankruptcy of Rite Aid in October 2023, and growth in specialty pharmaceuticals, partially offset by a LIFO charge of $89 million, and an increase in operating expenses to support higher volumes.

Operating profit for this segment increased for the nine months ended December 31, 2024 compared to the same prior year period primarily due to a prior year provision for bad debts of $725 million and a fiscal 2025 credit of $203 million related to the reassessment of our initial estimates made in conjunction with the previously reserved prepetition balances owed by Rite Aid, and growth in specialty pharmaceuticals, offset by an increase in operating expenses to support higher volumes, a decrease from net cash proceeds received representing our share of antitrust legal settlements, a charge of $57 million related to our estimated liability for opioid-related claims, and a loss related to one of our equity method investments.

Prescription Technology Solutions

Operating profit for this segment increased for the three months ended December 31, 2024 compared to the same prior year period driven by increased volumes with new and existing customers, primarily from growth in our technology services.

Operating profit for this segment decreased for the nine months ended December 31, 2024 compared to the same prior year period driven by the gain of $78 million recognized in the prior year resulting from a fair value adjustment of our contingent consideration liability related to the Rx Savings Solutions, LLC acquisition, and higher operating expenses, partially offset by contributions from technology services.

Medical-Surgical Solutions

Operating profit for this segment remained flat for the three months ended December 31, 2024 compared to the same prior year period primarily due to lower expenses resulting from business rationalization initiatives, offset by a decline in our primary care business, and higher restructuring charges.

Operating profit for this segment decreased for the nine months ended December 31, 2024 compared to the same prior year period due to higher restructuring charges recorded in fiscal 2025, a decline in our primary care business, and a lower contribution from kitting and distribution of ancillary supplies for COVID-19 vaccines, partially offset by lower expenses resulting from business rationalization initiatives.

International

Operating profit for this segment decreased for the three months ended December 31, 2024 compared to the same prior year period largely due to remeasurement charges related to our Canadian retail disposal group, as discussed in Financial Note 2, “Business Acquisitions and Divestitures” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

Operating (loss) for this segment for the nine months ended December 31, 2024 compared to an operating profit for the same prior year period was largely due to remeasurement charges related to our Canadian retail disposal group, as discussed in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report, partially offset by higher pharmaceutical distribution volumes across the segment.

Corporate Expenses, Net

Corporate expenses, net decreased for the three months ended December 31, 2024 compared to the same prior year period primarily due to gains related to our investments in equity securities of certain U.S. growth stage companies in the healthcare industry, a favorable impact on interest income, and remeasurement charges related to our Canadian retail disposal group, as discussed in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

Corporate expenses, net decreased for the nine months ended December 31, 2024 compared to the same prior year period primarily due to a net gain of $101 million related to our investments in equity securities of certain U.S. growth stage companies in the healthcare industry, favorable impact to interest income, and lower restructuring charges recorded in the first nine months of fiscal 2025 compared to the same prior year period, partially offset by a net charge of $51 million related to our estimated liability for opioid-related claims, and remeasurement charges related to our Canadian retail disposal group, as discussed in Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.