McKesson(MCK) - 2024 Q3 - Quarterly Report

Financial Performance - Revenues for the three months ended December 31, 2023, increased to $80,898 million, up from$70,490 million in the same period of 2022, representing a growth of 18.9%[8] - Gross profit for the nine months ended December 31, 2023, was $9,243 million, slightly down from$9,292 million in 2022, indicating a decrease of 0.5%[8] - Operating income for the three months ended December 31, 2023, was $642 million, compared to$1,241 million in the same period of 2022, reflecting a decline of 48.3%[8] - Net income attributable to McKesson Corporation for the three months ended December 31, 2023, was $589 million, down from$1,079 million in 2022, a decrease of 45.5%[9] - Net income for the nine months ended December 31, 2023, was $2,330 million, a decrease of 19.6$2,896 million in the same period of 2022[26] - The company reported an operating profit of $879 million for the three months ended December 31, 2023, compared to$1.4 billion in the same period of 2022[159] - Income from continuing operations attributable to McKesson Corporation was $589 million for the three months ended December 31, 2023, compared to$1,078 million in 2022[73] - Diluted earnings per share of $4.42 for the three months ended December 31, 2023, down from$7.66 in the same period of 2022[73] - Diluted earnings per common share from continuing operations decreased to $4.42 for the three months and$16.39 for the nine months ended December 31, 2023, down from $7.65 and$19.32, respectively, in the prior year[178] Cash Flow and Liquidity - Cash and cash equivalents decreased to $1,982 million as of December 31, 2023, from$4,678 million as of March 31, 2023, a decline of 57.7%[13] - Cash provided by operating activities significantly decreased to $167 million from$1,834 million year-over-year[26] - Total cash, cash equivalents, and restricted cash at the end of the period was $1,982 million, down from$2,774 million a year earlier[26] - The company reported a net cash used in financing activities of $2,374 million, compared to$3,178 million in the previous year[26] - The company recognized a total gain of $9 million on debt extinguishments for the nine months ended December 31, 2023[89] Debt and Financing - Long-term debt rose to$5,625 million as of December 31, 2023, from $4,626 million as of March 31, 2023, an increase of 21.6$991 million from $499 million year-over-year[26] - The company completed a public offering of 4.90$400 million and 5.10% Notes due July 15, 2033, for $600 million[85] - The company repurchased$271 million principal amount of its 2024 Notes for $268 million in a Concurrent Tender Offer[87] - The company has a$4.0 billion senior unsecured credit facility, with the maturity date extended to November 2028[91] - As of December 31, 2023, the company had $218 million in commercial paper notes outstanding at a weighted average interest rate of 5.53$0.62 per common share for the three months ended December 31, 2023, compared to $0.54 per common share in the same period of 2022, an increase of 14.8$2.6 billion to shareholders during the nine months ended December 31, 2023, through $2.3 billion in stock repurchases and$232 million in dividend payments[179] - During the three months ended December 31, 2023, the Company repurchased 1.9 million shares of common stock for $868 million at an average price of$457.16 per share[139] - The Company repurchased a total of 3.1 million shares under the ASR program at an average price of $321.05, totaling$1.0 billion[141] - An additional ASR program was initiated for $1.5 billion, resulting in the repurchase of 5.1 million shares at an average price of$295.16[144] - As of December 31, 2023, the total remaining authorization for stock repurchases was $7.3 billion[144] Acquisitions and Investments - The company completed the acquisition of Rx Savings Solutions, LLC for a total consideration of$692 million, including $600 million in cash and$92 million in contingent consideration[40][41] - McKesson formed SCRI Oncology, LLC with HCA Healthcare, acquiring a 51% controlling interest and paying $166 million in cash[45][46] - The company recognized fair value adjustment gains of$78 million on contingent consideration related to Rx Savings Solutions during the nine months ended December 31, 2023[41] - The carrying value of investments in equity securities of U.S. growth stage companies was $213 million at December 31, 2023[111] Legal and Regulatory Matters - The Company has paid approximately$1.5 billion to settling governmental entities as part of a settlement agreement, with an additional commitment of up to $6.3 billion through 2038[125] - The Company has made payments totaling$529 million associated with opioid-related settlements during the nine months ended December 31, 2023[128] - The Company has paid approximately $84 million to federally recognized Native American tribes as part of opioid-related claims, with an additional commitment of approximately$112 million through 2027[127] - The Company is involved in approximately 400 opioid-related cases brought by private plaintiffs, which are not included in the settlement agreements[129] - The Company has accrued liabilities for opioid-related claims, reflecting ongoing legal uncertainties and potential future losses[121] - The Company intends to vigorously defend itself against all opioid-related claims, asserting valid legal defenses[132] Operational Metrics - The U.S. Pharmaceutical segment generated revenues of $73.0 billion for the three months ended December 31, 2023, compared to$61.9 billion in 2022, reflecting a growth of approximately 18%[162] - The Prescription Technology Solutions segment reported revenues of $1.2 billion for the three months ended December 31, 2023, up from$1.1 billion in 2022[162] - The Medical-Surgical Solutions segment achieved revenues of $3.0 billion for the three months ended December 31, 2023, slightly increasing from$3.0 billion in 2022[162] - The International segment's revenues decreased to $3.6 billion for the three months ended December 31, 2023, down from$4.4 billion in 2022[162] - The provision for bad debts related to the bankruptcy of Rite Aid Corporation amounted to $515 million for the three months and$725 million for the nine months ended December 31, 2023[178] Tax Matters - The Company recognized a net discrete tax benefit of $141 million during the three months ended December 31, 2023, primarily due to the release of a valuation allowance[67] - As of December 31, 2023, the Company had$1.4 billion of unrecognized tax benefits, with $1.3 billion potentially reducing income tax expense if recognized[68] - A discrete tax benefit of$154 million was recognized for the three months ended December 31, 2023, related to the release of a valuation allowance on deferred tax assets[179] Restructuring and Impairment - The company incurred restructuring, impairment, and related charges of $4 million for the three months ended December 31, 2023, compared to$31 million in the same period of 2022, indicating a significant reduction in such charges[8] - Total restructuring charges anticipated across segments are approximately $125 million, with$101 million recorded through December 31, 2023[59] - Corporate restructuring charges amounted to $50 million for the nine months ended December 31, 2023, compared to$38 million in the prior year[178]