McKesson (MCK) 10-K risk factor changes: FY2023 vs FY2022

[added: |] [Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7) | | |]

We are routinely named as a defendant in litigation or regulatory proceedings and other legal disputes, which may include asserted class action litigation, such as those described in Financial Note [removed: 18,] [added: 17,] “Commitments and Contingent Liabilities,” to the consolidated financial statements [added: included] in this Annual Report.

Despite valid defenses that we assert, legal disputes are often costly, time-consuming, distracting to [removed: management] [added: management,] and disruptive to normal business operations.

[removed: Outcomes can] [added: The outcome of legal disputes is difficult to predict, and outcomes may] occur that [added: we believe] are not justified by the evidence or existing law.

Our business exposes us to risks that are inherent in the distribution, manufacturing, [removed: dispensing] [added: dispensing,] and administration of pharmaceuticals and medical-surgical supplies, the provision of ancillary services, the conduct of our payer [removed: businesses] [added: businesses,] and the provision of products that assist clinical decision-making and relate to patient medical histories and treatment plans.

The Company is a defendant in many litigation matters alleging claims related to the distribution of controlled substances (opioids), as described in Financial Note [removed: 18,] [added: 17,] “Commitments and Contingent Liabilities,” to the consolidated financial statements in this Annual Report.

We [removed: regularly] are [added: sometimes] named as a defendant in similar, new cases.

The plaintiffs in those cases include governmental entities (such as states, provinces, counties, and municipalities) as well as businesses, [removed: groups] [added: groups,] and individuals.

[removed: Any proceedings] [added: Many of these cases raise novel theories of liability and] can have unexpected outcomes that [added: we believe] are not justified by evidence or existing law.

Our reputation has been and may continue to be impacted by publicity regarding [removed: the] [added: opioids] litigation and related allegations.

[removed: The] [added: An] adverse outcome of [added: any such] legal proceedings might have a materially adverse impact on our business operations and our financial position or results of operations.

Liabilities for taxes or assessments or other costs of compliance under any such laws might have a materially adverse impact on our reputation, [added: our] business operations, and our financial position or results of operations.

We are subject to extensive, [removed: complex] [added: complex,] and challenging [removed: healthcare] [added: healthcare, environmental,] and other laws.

[removed: Our] [added: As described in “Government Regulation” in Item 1 of Part I above, our] industry is highly regulated, and further regulation of our distribution businesses and technology products and services could impose increased costs, negatively impact our profit margins and the profit margins of our customers, delay the introduction or implementation of our new products, or otherwise negatively impact our business and expose the Company to litigation and regulatory investigations.

Additionally, we are subject to various routine [removed: agency] and ad hoc inspections by government agencies to determine compliance with various statutes and regulations.

Any noncompliance by us with applicable laws or the failure to maintain, [removed: renew] [added: renew,] or obtain necessary permits and licenses could lead to enforcement actions or litigation and might have a materially adverse impact on our business operations and our financial position or results of operations.

We are subject to extensive and frequently changing laws relating to healthcare fraud, [removed: waste] [added: waste,] and abuse.

[removed: Federal,] [added: As described in “Government Regulation” in Item 1 of Part I above, federal,] state, and local governmental entities in the U.S. and elsewhere continue to strengthen their position and scrutiny over practices that may indicate fraud, [removed: waste] [added: waste,] and abuse affecting government healthcare programs such as Medicare and Medicaid.

Failures to comply with those [removed: laws exposes] [added: laws, including the federal Anti-Kickback Statute, expose] us to federal or state government investigations or qui tam actions, and to liability for damages and civil and criminal penalties.

Such failures might result in the loss of licenses or our ability to participate in Medicare, [removed: Medicaid] [added: Medicaid,] or other federal and state healthcare [removed: programs.][added: programs, or pursue government contracts.]

We might lose our ability to purchase, compound, [removed: store] [added: store,] or distribute pharmaceuticals and controlled substances.

[removed: We] [added: As described in “Government Regulation” in Item 1 of Part I above, we] are subject to the operating and security standards of the DEA, the FDA, various state boards of pharmacy, state health departments, the CMS, and other comparable agencies.

[removed: If we are not able] [added: Any inability] to obtain, maintain, or renew permits, licenses, or other regulatory approvals needed for the operation of our [removed: businesses, it] [added: businesses] might have a materially adverse impact on our business operations and our financial position or results of operations.

[removed: We] [added: As described in “Government Regulation” in Item 1 of Part I above, we] are subject to a variety of privacy and data protection laws that change frequently and have requirements that vary from jurisdiction to jurisdiction.

We are subject to [removed: privacy and data protection compliance audits or investigations by various] government [removed: agencies.][added: audits, investigations, and oversight proceedings.]

Our efforts to comply with privacy [added: and data security] laws [removed: complicates] [added: complicate] our operations and [removed: adds] [added: add] to our costs.

A significant privacy breach or failure to comply with privacy and data security laws might have a materially adverse impact on our reputation, [added: our] business operations, and our financial position or results of operations.

We are subject to laws prohibiting improper payments and bribery, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery [removed: Act] [added: Act,] and similar regulations in other jurisdictions.

Our failure to comply with these laws might subject us to civil and criminal penalties that might have a materially adverse impact on our reputation, [added: our] business [removed: operations] [added: operations,] and our financial position or results of operations.

We might record significant charges from impairment to goodwill, [removed: intangibles] [added: intangibles,] and other [removed: assets or investments.][added: long-lived assets.]

Factors that may be considered a change in circumstances indicating that the carrying value of our intangible and other long-lived assets may not be recoverable include slower growth rates, the loss of a significant customer, burdensome new [removed: laws] [added: laws,] or divestiture of a business or asset for less than its carrying value.

There are inherent uncertainties in management’s estimates, [removed: judgments] [added: judgments,] and assumptions used in assessing recoverability of goodwill, [removed: intangible,] [added: intangibles,] and other long-lived assets.

Any material changes in key assumptions, including failure to meet business plans, negative changes in government reimbursement rates, a deterioration in the U.S. and global financial markets, an increase in interest [removed: rate] [added: rates, an increase in inflation,] or an increase in the cost of equity financing by market participants within the [removed: industry] [added: industry,] or other unanticipated events and circumstances, may decrease the projected cash flows or increase the discount rates and could potentially result in an impairment charge.

We, our external service providers, and other third parties with which we do [removed: business] [added: business,] use technology and systems to perform our business operations, such as the secure electronic transmission, processing, [removed: storage] [added: storage,] and hosting of sensitive information, including protected health information and other types of personal information, confidential financial information, proprietary information, and other sensitive information relating to our customers, [removed: company] [added: company,] and workforce.

The risk of cyberattacks increases from time to time due to a variety of internal and external factors, including during political [removed: conflicts] [added: tensions, military conflicts,] or [added: civil] unrest.

A cybersecurity incident might involve a material data breach or other material impact to the confidentiality, integrity, availability, and operations of our technology systems or data, which might result in injury to patients or consumers, litigation or regulatory action, disruption of our business operations, loss of customers or revenue, and increased expense, any of which might have a materially adverse impact on our business, [added: our] reputation, and our financial position or results of operations.

The networks and hosting systems are vulnerable to interruption or damage from sources beyond our control, such as power loss, telecommunications failures, fire, natural disasters, [added: including as a result of climate change,] software and hardware [removed: failures] [added: failures,] and cybersecurity incidents.

Any such problems might have a materially adverse impact on our business, [added: our] reputation, and our financial position or results of operations.

Our [added: technology] products or services might not conform to specifications or perform as we intend.

Any of these types of errors or failures might have a materially adverse impact on our reputation, [added: our] business operations, and our financial position or results of operations.

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| Section | | | Page | | |

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| [Litigation and Regulatory Risks](#i04335d018da94076b0acf21e81ac886b_2271) | | | [14](#i04335d018da94076b0acf21e81ac886b_2271) | | |

| | | | | | |

| [Company and Operational Risks](#i04335d018da94076b0acf21e81ac886b_2298) | | | [16](#i04335d018da94076b0acf21e81ac886b_2298) | | |

| | | | | | |

| [Industry and Economic Risks](#i04335d018da94076b0acf21e81ac886b_2325) | | | [21](#i04335d018da94076b0acf21e81ac886b_2325) | | |

| | | | | | |

| [General Risks](#i04335d018da94076b0acf21e81ac886b_2351) | | | [24](#i04335d018da94076b0acf21e81ac886b_2351) | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1A Index](#i04335d018da94076b0acf21e81ac886b_16) | | |

For example, we are also subject to consent decrees issued by state courts that govern our distribution of controlled substances.

We incur cleanup costs under environmental laws and may incur additional costs under environmental laws.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1A Index](#i04335d018da94076b0acf21e81ac886b_16) | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1A Index](#i04335d018da94076b0acf21e81ac886b_16) | | |

Pharmaceutical and medical products that we distribute might not conform to specifications or perform as intended.

We distribute pharmaceutical and medical products manufactured by third parties and by our private label generic pharmaceutical business, including medications that may be temperature sensitive and have limited shelf lives.

Our systems are designed to maintain the safety and efficacy of the products throughout the distribution process.

Issues affecting product efficacy or safety can arise from manufacturing, storing, distributing, dispensing or using products, and can result in safety alerts, recalls, regulatory action, civil lawsuits, fines or other sanctions, and reputational damage.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1A Index](#i04335d018da94076b0acf21e81ac886b_16) | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1A Index](#i04335d018da94076b0acf21e81ac886b_16) | | |

Refer to “Other Information about the Business” in Item 1 of Part I above for additional details on our customers.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1A Index](#i04335d018da94076b0acf21e81ac886b_16) | | |

For example, the changing distribution scope of COVID-19 vaccines, consumer demand, supply chain stability, and the cost of distribution subject our operating results to variability.

Laws limiting or reducing pharmaceutical prices may impact our distribution agreements.

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| --- | --- | --- | --- | --- | --- |

McKESSON CORPORATION

The outcome of legal disputes is difficult to predict.

Many of these cases raise novel theories of liability.

For example, we are subject to many environmental and hazardous materials regulations, including those relating to radiation-emitting equipment operated at U.S. Oncology Network practices.

Our relationships with companies and individuals including pharmaceutical and medical surgical product manufacturers and healthcare providers, as well as our provision of products and services to government entities, subject our business to statutes, regulations, or government guidance that are intended to prevent fraud, waste, and abuse.

Among other things, those laws: (1) prohibit persons from soliciting, offering, receiving, or paying any remuneration in order to induce the referral of a patient for treatment or to induce the ordering or purchasing of items or services that are in any way paid for by Medicare, Medicaid, or other government-sponsored healthcare programs; (2) impose many restrictions upon referring physicians and providers of designated health services under Medicare and Medicaid programs; and (3) prohibit the knowing submission of a false or fraudulent claim for payment to, and knowing retention of an overpayment by, a federal healthcare program such as Medicare and Medicaid.

Many of these laws, including those relating to marketing incentives, are vague or indefinite and have not been interpreted by the courts, regulators, or enforcing agencies.

Certain of our businesses may be required to register for permits and/or licenses with, and comply with operating and security standards of, the DEA, FDA, CMS, various state boards of pharmacy, state health departments and/or comparable state agencies as well as foreign agencies and certain accrediting bodies, depending upon the type of operations and location of product development, manufacture, distribution, and sale.

For example, we are required to hold valid DEA and state-level registrations and licenses, meet various security and operating standards, and comply with the Controlled Substances Act and its accompanying regulations governing the sale, marketing, packaging, holding, distribution, and disposal of controlled substances.

For example, under HIPAA we must maintain administrative, physical, and technological safeguards for protected health information and ensure the confidentiality, integrity, and availability of electronic protected health information.

We are subject to significant compliance obligations under privacy laws such as the GDPR in the E.U., the PIPEDA in Canada, and an expanding list of comprehensive state privacy laws in the United States, including the CCPA in California.

Some privacy laws prohibit the transfer of personal information to certain other jurisdictions or otherwise limit our use of data.

Many of these laws also require us to provide access or other data rights (modification, deletion, portability, etc.) to consumers’ and patients’ individual personal data records within specified periods of time.

Laws such as the federal Cyber Incident Reporting for Critical Infrastructure Act of 2022 may require us to provide notifications of significant data privacy breaches or cybersecurity incidents before our investigations are complete.

The U.K. Bribery Act, for example, prohibits both domestic and international bribery, as well as bribery across both private and public sectors.

An organization that fails to prevent bribery committed by anyone associated with the organization can be charged under the U.K. Bribery Act unless the organization can establish the defense of having implemented adequate procedures to prevent bribery.

For example, the COVID-19 pandemic has disrupted the global economy and exacerbated uncertainties inherent in estimates, judgments and assumptions used in our forecasts and impairment assessments.

In July 2021, we announced our intention to exit our businesses in Europe.

Refer to Financial Note 2, “Held for Sale,” to the accompanying consolidated financial statements included in this Annual Report for information on our European divestiture activities.

Our business strategy included expanding our retail pharmacy operations.

Our retail pharmacy operations involve numerous risks, such as the following ones.

We might encounter difficulties attracting and retaining customers to our retail locations due to their unfamiliarity with our brands or our inexperience with local market preferences.

Competition from our retail pharmacy operations might strain relationships with our retail pharmacy customers.

Consolidation of retail pharmacies with third-party payers, expansion of large retail pharmacy networks, reductions in reimbursement rates, shifts in the mix of branded and generic pharmaceutical sales, and exclusion from preferred pharmacy networks can impair our retail pharmacy sales and profitability.

Failure to maintain profitable retail pharmacy operations may result in significant costs, including those associated with site closures and reductions in workforce.

We incur long-lived asset impairments related to our retail pharmacy networks.

We are subject to government audits, investigations and oversight proceedings.

We also provide supplies used for vaccine administration in the Federal COVID-19 Response.

Our participation in such programs exposes us to various uncertainties.

For example, the novel nature and rapid mutation of the SARS-CoV‑2 virus, the changing distribution scope of COVID-19 vaccines, supply chain stability, inflation, and the effectiveness of other COVID-19 transmission mitigation measures introduce uncertainty about what volumes of vaccines and related supplies may be distributed by us, the safety and efficacy of newly developed vaccines, and the cost of distribution.

Because of such uncertainties, our operating results may be subject to variability.

There have been continued efforts to challenge the ACA.

There are also efforts to broaden healthcare coverage.

U.S. lawmakers also have explored proposals to reduce drug prices, including requiring greater price transparency, enabling Medicare to directly negotiate drug prices, and drug importation measures.

So far, lower courts have rendered somewhat conflicting opinions.

Many European governments provide or subsidize healthcare to consumers and patients by regulating pharmaceutical prices, patient eligibility, or reimbursement levels to control government healthcare system costs.

European governments are continuously reviewing measures to support the reduction of public healthcare spending.

Such measures can exert pressure on pricing frameworks and reimbursement timelines for pharmaceuticals, which in turn may impact customer behavior.

There is substantial uncertainty about the likelihood and timing of any healthcare policy reform as each E.U. country operates in a separate healthcare environment.

We might be adversely impacted by changes or disruptions in product supply.

| [Overview of Our [removed: Business](#i4b4e3b23ed904498bf3396ff0593cb05_1999)] [added: Business](#i04335d018da94076b0acf21e81ac886b_49)] | | | [removed: [32](#i4b4e3b23ed904498bf3396ff0593cb05_1999)] [added: [30](#i04335d018da94076b0acf21e81ac886b_49)] | | |

| [Executive [removed: Summary](#i4b4e3b23ed904498bf3396ff0593cb05_2006)] [added: Summary](#i04335d018da94076b0acf21e81ac886b_52)] | | | [removed: [34](#i4b4e3b23ed904498bf3396ff0593cb05_2006)] [added: [32](#i04335d018da94076b0acf21e81ac886b_52)] | | |

| [Trends and [removed: Uncertainties](#i4b4e3b23ed904498bf3396ff0593cb05_2013)] [added: Uncertainties](#i04335d018da94076b0acf21e81ac886b_55)] | | | [removed: [35](#i4b4e3b23ed904498bf3396ff0593cb05_2013)] [added: [34](#i04335d018da94076b0acf21e81ac886b_55)] | | |

| [Overview of Consolidated [removed: Results](#i4b4e3b23ed904498bf3396ff0593cb05_2020)] [added: Results](#i04335d018da94076b0acf21e81ac886b_58)] | | | [removed: [40](#i4b4e3b23ed904498bf3396ff0593cb05_2020)] [added: [37](#i04335d018da94076b0acf21e81ac886b_58)] | | |

| [Overview of Segment [removed: Results](#i4b4e3b23ed904498bf3396ff0593cb05_49)] [added: Results](#i04335d018da94076b0acf21e81ac886b_61)] | | | [removed: [46](#i4b4e3b23ed904498bf3396ff0593cb05_49)] [added: [43](#i04335d018da94076b0acf21e81ac886b_61)] | | |

| [Foreign [removed: Operations](#i4b4e3b23ed904498bf3396ff0593cb05_58)] [added: Operations](#i04335d018da94076b0acf21e81ac886b_67)] | | | [removed: [50](#i4b4e3b23ed904498bf3396ff0593cb05_58)] [added: [46](#i04335d018da94076b0acf21e81ac886b_67)] | | |

| [Business [removed: Combinations](#i4b4e3b23ed904498bf3396ff0593cb05_61)] [added: Combinations](#i04335d018da94076b0acf21e81ac886b_70)] | | | [removed: [50](#i4b4e3b23ed904498bf3396ff0593cb05_61)] [added: [46](#i04335d018da94076b0acf21e81ac886b_70)] | | |

[removed: | [Fiscal 2023 Outlook](#i4b4e3b23ed904498bf3396ff0593cb05_64) | | | [50](#i4b4e3b23ed904498bf3396ff0593cb05_64) | | |][added: FISCAL 2024 OUTLOOK]

[removed: | [Critical Accounting Policies and Estimates](#i4b4e3b23ed904498bf3396ff0593cb05_67) | | | [50](#i4b4e3b23ed904498bf3396ff0593cb05_67) | | |][added: CRITICAL ACCOUNTING ESTIMATES]

| [Financial Condition, Liquidity, and Capital [removed: Resources](#i4b4e3b23ed904498bf3396ff0593cb05_70)] [added: Resources](#i04335d018da94076b0acf21e81ac886b_79)] | | | [removed: [55](#i4b4e3b23ed904498bf3396ff0593cb05_70)] [added: [51](#i04335d018da94076b0acf21e81ac886b_79)] | | |

| [Related Party Balances and [removed: Transactions](#i4b4e3b23ed904498bf3396ff0593cb05_73)] [added: Transactions](#i04335d018da94076b0acf21e81ac886b_85)] | | | [removed: [61](#i4b4e3b23ed904498bf3396ff0593cb05_73)] [added: [57](#i04335d018da94076b0acf21e81ac886b_85)] | | |

| [New Accounting [removed: Pronouncements](#i4b4e3b23ed904498bf3396ff0593cb05_76)] [added: Pronouncements](#i04335d018da94076b0acf21e81ac886b_88)] | | | [removed: [61](#i4b4e3b23ed904498bf3396ff0593cb05_76)] [added: [57](#i04335d018da94076b0acf21e81ac886b_88)] | | |

Our Financial Review within this [removed: Form 10-K] [added: Annual Report] generally discusses [removed: 2022] [added: fiscal 2023] and [removed: 2021] [added: fiscal 2022] results and year-over-year comparisons between [removed: 2022] [added: fiscal 2023] and [removed: 2021.][added: fiscal 2022.]

For a discussion [removed: on] [added: of] our year-over-year comparisons between [removed: 2021] [added: fiscal 2022] and [removed: 2020,] [added: fiscal 2021,] refer to [removed: our Annual Report on Form 10-K for the year ended March 31, 2021,] Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part [removed: II,] [added: II of our Annual Report on Form 10-K for the year ended March 31, 2022,] previously filed with the Securities and Exchange Commission on May [removed: 12, 2021.][added: 9, 2022.]

Certain statements in this [removed: report] [added: Annual Report] constitute forward-looking statements.

See Item 1 - Business - Forward-Looking Statements in Part I of this Annual Report for additional factors relating to these statements and Item 1A - Risk Factors in Part I of this Annual Report for a list of certain risk factors applicable to our business, financial [removed: condition,] [added: condition] and [added: liquidity, and] results of operations.

| [Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)] [added: Contents](#i04335d018da94076b0acf21e81ac886b_7)] | | | [MD&A [removed: Index](#i4b4e3b23ed904498bf3396ff0593cb05_46)] [added: Index](#i04335d018da94076b0acf21e81ac886b_43)] | | |

[removed: McKESSON CORPORATION][added: Net Income Attributable to McKesson Corporation]

[removed: FINANCIAL REVIEW] [added: FINANCIAL REVIEW] (Continued)

We report our [added: financial] results in four reportable segments: U.S. Pharmaceutical, Prescription Technology Solutions (“RxTS”), Medical-Surgical Solutions, and International.

Our organizational structure also includes Corporate, which consists of income and expenses associated with administrative functions and [removed: projects, and] [added: projects as well as] the results of certain investments.

We evaluate the performance of our operating segments on a number of measures, including revenues and operating profit [added: (loss)] before interest expense and income taxes.

Refer to Financial Note [removed: 21,] [added: 20,] “Segments of Business,” to the consolidated financial statements included in this Annual Report for further information regarding our reportable segments.

- Prescription Technology Solutions is a reportable segment that combines automation and our ability to navigate the healthcare [removed: ecosystem] [added: ecosystems] to connect [added: patients,] pharmacies, providers, [removed: payers,] [added: pharmacy benefit managers, health plans,] and biopharma companies to address patients’ medication access, [removed: adherence,] [added: affordability,] and [removed: affordability challenges to help people get the medicine they need to live healthier lives.][added: adherence challenges.]

- [removed: Medical-Surgical] [added: Medical-Surgical] Solutions is a reportable segment that provides medical-surgical supply distribution, logistics, and other services to healthcare providers in the United States [removed: (“U.S.”).][added: (“U.S.”), including physician offices, surgery centers, nursing homes, hospital reference labs, and home health care agencies.]

During [removed: 2022,] [added: fiscal 2023,] we [removed: entered into agreements] [added: completed transactions] to sell certain of our businesses in the European Union (“E.U.”) and our retail and distribution businesses in the United Kingdom (“U.K.”), [removed: as well as] [added: and during fiscal 2022, we] completed the sale of our Austrian business.

On [removed: July 5, 2021,] [added: October 31, 2022,] we [removed: entered into an agreement] [added: completed the previously announced transaction] to sell certain of our businesses in the E.U. located in France, Italy, Ireland, Portugal, Belgium, and Slovenia, along with our German headquarters and wound-care business, part of a shared services center in Lithuania, and our ownership stake in a joint venture in the Netherlands (“E.U. disposal group”) to the PHOENIX [removed: Group for a purchase price of €1.2 billion (or, approximately $1.4 billion) adjusted for certain items, including cash, net debt and working capital adjustments, and reduced by the value of the noncontrolling interest held by minority shareholders of McKesson Europe AG (“McKesson Europe”) at the transaction closing date.][added: Group.]

[removed: We recorded] [added: -] charges of [removed: $438] [added: $240] million [added: and $383 million] for the [removed: year] [added: years] ended March 31, [removed: 2022 in total operating expenses] [added: 2023 and 2022, respectively,] to remeasure [removed: the] [added: our] E.U. disposal group [added: held for sale] to fair value less costs to sell [removed: and] [added: and, in fiscal 2022,] to impair certain internal-use software that will not be utilized in the [removed: future.][added: future;]

The remeasurement adjustment includes a $151 million loss related to the accumulated other comprehensive [removed: income] [added: loss] balances associated with the E.U. disposal group, driven by declines in the Euro.

[removed: In] [added: On] April [added: 6,] 2022, we [removed: entered into an amendment to] [added: completed] the [removed: agreement] [added: previously announced sale of our retail and distribution businesses in the U.K. (“U.K. disposal group”) to Aurelius Elephant Limited] for a purchase price of £110 million (or, approximately $144 million), including certain adjustments.

[removed: We recorded] [added: -] charges of [removed: $1.2] [added: $1.1] billion for the year ended March 31, 2022 [removed: in total operating expenses] to remeasure [removed: the] [added: our] U.K. disposal group [added: held for sale] to fair value less costs to [removed: sell.][added: sell;]

The remeasurement adjustment includes a $734 million loss related to the accumulated other comprehensive [removed: income] [added: loss] balances associated with the U.K. disposal group, driven by declines in the British pound sterling.

[removed: On January] [added: Other income, net for the year ended March] 31, [removed: 2022, we sold] [added: 2022 also includes a gain of $42 million related to the sale of] our 30% interest in [removed: the] [added: our] German pharmaceutical wholesale joint venture [removed: to] [added: with] Walgreens Boots Alliance (“WBA”).

[removed: We recognized] [added: This amount was recorded as] a [removed: $42 million] gain within “Other income, net” in the Consolidated Statement of Operations [removed: for the year ended March 31, 2022 related to this sale.][added: within Corporate;]

As of March 31, [removed: 2022,] [added: 2023,] we had [removed: $4.5 billion of] [added: no] assets [removed: and $4.7 billion of] [added: or] liabilities [removed: classified as “Assets held for sale” and “Liabilities] [added: related to these completed European divestiture activities that met the classification of] held for [removed: sale,” respectively,] [added: sale] in the Consolidated Balance [removed: Sheet primarily related to the European divestiture activities described above.][added: Sheet.]

Refer to Financial Note [removed: 2, “Held for Sale,”] [added: 9, “Leases,”] to the consolidated financial statements included in this Annual Report for more information.

The following summary provides highlights and key factors that impacted our business, operating results, financial condition, and liquidity for the year ended March 31, [removed: 2022.][added: 2023:]

[removed: We also had favorable] [added: Although] contributions from [added: sales of COVID-19 tests and] our COVID-19 vaccine and related ancillary supply kit distribution programs [removed: during 2022;][added: were favorable to our results for the year ended March 31, 2023, they were less favorable compared to fiscal 2022 as the recovery from the pandemic continued.]

[removed: -] In [added: fiscal] 2021, we began distributing certain COVID-19 vaccines under the direction of the Centers for Disease Control and Prevention (“CDC”).

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RxTS also offers prescription price transparency, benefit insight, dispensing support services, third-party logistics, and wholesale distribution support across various therapeutic categories and temperature ranges to biopharma customers throughout the product lifecycle.

This segment offers national brand medical-surgical products as well as McKesson’s own line of high-quality products through a network of distribution centers within the U.S.

Our remaining operations in Europe provide distribution and services to wholesale, institutional, and retail customers in Norway where we own, partner, or franchise with retail pharmacies.

Our operations in Canada deliver vital medicines, supplies and information technology solutions throughout Canada and includes Rexall Health pharmacies.

Business Acquisitions and Divestitures

*Rx Savings Solutions, LLC*

On November 1, 2022, we completed the acquisition of 100% of the shares of Rx Savings Solutions, LLC (“RxSS”), a privately-owned company headquartered in Overland Park, Kansas, to further connect our biopharma and payer services to patients.

RxSS is a prescription price transparency and benefit insight company that offers affordability and adherence solutions to health plans and employers.

The purchase consideration included a payment of $600 million in cash made upon closing and a maximum of $275 million of contingent consideration based on RxSS’ operational and financial performance through calendar year 2025.

The payment made upon closing was funded from cash on hand, and we recorded a liability of $92 million as of the acquisition date representing the estimated fair value of the contingent consideration.

As of March 31, 2023, the current portion of $83 million is included within “Other accrued liabilities” and the long-term portion of $9 million is included within “Other non-current liabilities” in the Company’s Consolidated Balance Sheet.

The financial results of RxSS are included in our RxTS segment as of the acquisition date.

The transaction was accounted for as a business combination.

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [MD&A Index](#i04335d018da94076b0acf21e81ac886b_43) | | |

FINANCIAL REVIEW (Continued)

*SCRI Oncology, LLC*

On October 31, 2022, we completed a transaction with HCA to form SCRI Oncology, LLC (“SCRI Oncology”), an oncology research business, combining our U.S. Oncology Research (“USOR”) and HCA’s Sarah Cannon Research Institute (“SCRI”) based in Nashville, Tennessee, to advance cancer care and increase access to oncology clinical research.

Upon consummation of the transaction, we own a 51% controlling interest in the combined business, and the financial results are consolidated and reported within our U.S. Pharmaceutical segment as of the acquisition date.

Transaction consideration included the transfer of full ownership interest in USOR to the combined business and $173 million of cash paid to HCA, which was funded from cash on hand.

The transaction was accounted for as a business combination.

As part of the transaction, we received cash proceeds of $892 million and divested net assets of $1.3 billion, including cash of $319 million, derecognized the carrying value of the noncontrolling interest held by minority shareholders of McKesson Europe AG (“McKesson Europe”) of $382 million, and released $153 million of net accumulated other comprehensive loss.

We recorded net gains of $66 million and net charges of $438 million for the years ended March 31, 2023 and 2022, respectively, in “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations to remeasure the assets and liabilities of our E.U. disposal group to fair value less costs to sell.

The fiscal 2022 charges also included impairments of certain internal-use software that will not be utilized in the future, prior to adjusting the E.U. disposal group as a whole, and net losses of $151 million related to the accumulated other comprehensive loss balances associated with our E.U. disposal group, driven by declines in the Euro.

As part of the transaction, we divested net assets of $615 million and released $731 million of accumulated other comprehensive loss.

The remeasurement adjustment included a $734 million loss related to the accumulated other comprehensive loss balances associated with the U.K. disposal group, driven by declines in the British pound sterling.

During the year ended March 31, 2022, we recognized a loss of $32 million related to this divestiture which was recorded within “Selling, distribution, general, and administrative expenses” in our Consolidated Statement of Operations.

Subsequent to the divestiture activities discussed above, the Company’s European operations primarily consist of its retail and distribution businesses in Norway.

Refer to Financial Note 2, “Business Acquisitions and Divestitures,” to the consolidated financial statements included in this Annual Report for more information regarding these acquisition and divestiture transactions.

- For the year ended March 31, 2023 compared to the prior year, revenues increased by 5%, gross profit decreased by 6%, total operating expenses decreased by 28%, and other income, net increased by 92%.

Refer to the “Overview of Consolidated Results” section below for an analysis of these changes;

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FINANCIAL REVIEW (Continued)

- In fiscal 2023, we extended our pharmaceutical distribution partnership with CVS to June 2027;

- On November 1, 2022, we completed our acquisition of RxSS.

The purchase consideration included a payment of $600 million in cash made upon closing and a maximum of $275 million of contingent consideration, as discussed in further detail in the *“Business Acquisitions and Divestitures”* section above;

- On October 31, 2022, we completed a transaction with HCA to form SCRI Oncology.

The transaction consideration included the transfer of full ownership interest in USOR to the combined business and $173 million of cash paid to HCA as discussed in further detail in the *“Business Acquisitions and Divestitures”* section above;

- On October 31, 2022, we completed the sale of our E.U. disposal group and received cash proceeds of $892 million, as discussed in further detail in the *“Business Acquisitions and Divestitures”* section above;

- In October 2022, we received $129 million related to our share of an antitrust settlement.

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The transaction is anticipated to close within the second half of fiscal year 2023, pursuant to the satisfaction of customary closing conditions, including receipt of regulatory approvals.

On November 1, 2021, we announced an agreement to sell our retail and distribution businesses in the U.K. (“U.K. disposal group”) to Aurelius Elephant Limited.

The transaction closed on April 6, 2022, and at closing the buyer assumed and repaid a note payable to us of approximately $118 million.

We divested net assets of the Austrian business of $272 million, primarily within the International segment, and the buyer assumed a note payable to us of approximately $63 million which was paid to us in the fourth quarter of 2022.

We recorded a charge of $32 million for the year ended March 31, 2022 in total operating expenses to remeasure the Austrian business to fair value less costs to sell.

- The pandemic disease caused by the SARS-CoV-2 coronavirus (“COVID-19”) impacted our results of operations for the year ended March 31, 2022.

As previously disclosed in our 2021 Annual Report, pharmaceutical distribution volumes decreased across the enterprise during the first quarter of 2021 as a result of the weakened and uncertain global economic environment and COVID-19 restrictions, including government-mandated business shutdowns and shelter-in-place orders, following the onset of the pandemic.

The recovery from the pandemic is favorably reflected in our results when comparing 2022 versus 2021.

- Revenues of $264 billion, reflects an 11% increase from the prior year primarily driven by market growth in our U.S. Pharmaceutical segment;

- Gross profit increased 8% from the prior year primarily driven by improvements in primary care patient visits and the contribution from kitting and distribution of ancillary supplies for COVID-19 vaccines in our Medical-Surgical Solutions segment as well as growth of specialty pharmaceuticals and the contribution from our COVID-19 vaccination distribution program in our U.S. Pharmaceutical segment;

- Total operating expenses in 2022 includes fair value remeasurement charges related to our *“European Divestiture Activities”* discussed above;

- On July 23, 2021, we completed a cash tender offer and paid an aggregate consideration of $1.1 billion to redeem certain notes with a principal amount of $922 million.

As a result of the redemption, we incurred a loss on debt extinguishment in the second quarter of 2022 of $191 million, consisting of the premiums paid and a portion of the write-off of unamortized debt issuance costs in an amount proportional to the principal amount of debt retired.

On August 12, 2021, we also completed a public offering of 1.30% notes due August 15, 2026 with a principal amount of $500 million for proceeds received, net of discounts and offering expenses, of $495 million.

- In December 2021, we announced that our Board of Directors (the “Board”) approved an increase of $4.0 billion for the authorized repurchases of our common stock.

The SARS-CoV-2 novel strain of coronavirus, which causes the infectious disease known as COVID-19, continues to evolve since it was declared a global pandemic on March 11, 2020 by the World Health Organization.

The full extent to which COVID-19 will impact us depends on many factors and future developments, which are described in our *“Risks and Forward-Looking Information”* section below.

*Our Response to COVID-19 in the Workplace*

We are committed to continuing to supply our customers and protect the safety of our employees.

The various responses we put in place to mitigate the impact of COVID-19 on our business operations include telecommuting and work-from-home policies, restricted travel, employee support programs, and enhanced safety measures.

During the first quarter of 2022, we approved changes to our real estate strategy to increase efficiencies and support flexibility for our employees, including a partial remote work model for certain employees as further discussed in this Financial Review and in Financial Note 3, “Restructuring, Impairment, and Related Charges, Net,” to the consolidated financial statements included in this Annual Report.

During the third quarter of 2022, we continued to refine our policies and apply safety measures in the workplace as recommended by the Centers for Disease Control and Prevention (“CDC”) as COVID-19 cases increased across North America and Europe driven by the highly contagious Omicron variant.

During 2022, we continued COVID-19 vaccination protocols for our U.S. and Canada employees, which are designed to be consistent with federal, state, and local laws and with customer requirements and to protect the safety of our employees, customers, patients, and communities while also safeguarding the healthcare supply chain.

In Europe, we followed applicable government guidelines.

We continue to monitor all of these changing laws, requirements and guidelines.

We have not observed a material increase in employee turnover as a result of COVID-19 vaccination protocols; however, we are unable to predict whether such protocols will have a material impact on our workforce in the future.

Through a contract with the CDC, we continue to support the U.S. government as a centralized distributor of COVID-19 vaccines and ancillary supplies needed to administer vaccines.

We began distributing certain COVID-19 vaccines in December 2020.

In the first quarter of 2022, McKesson began supporting the U.S. government’s commitment to donate COVID-19 vaccines worldwide.

For this initiative, we are responsible for picking and packing the COVID-19 vaccines into temperature-controlled coolers and preparing them for pickup by an international partner.

We do not manage the actual shipments of the vaccines to other countries.

The future financial impact of the arrangements with the CDC and HHS depend on numerous uncertainties, which are described in our *“Risks and Forward-Looking Information”* section below.

Additionally, McKesson Canada and McKesson Europe are distributing COVID-19 tests and certain PPE.

At the onset of the COVID-19 pandemic late in our fourth quarter of 2020, we had higher pharmaceutical distribution volumes and increased retail pharmacy foot traffic as our customers increased supplies on hand in March.

During 2021, pharmaceutical distribution volumes decreased as a result of the weakened and uncertain global economic environment and COVID-19 restrictions, including government-mandated business shutdowns and shelter-in-place orders.

We also had a decrease in demand for primary care medical-surgical supplies due to deferrals in elective procedures in hospitals and surgery centers as well as decreased traffic and closures of doctors’ offices, which was partially offset by demand for PPE and COVID-19 tests.

Additionally, the decreased traffic in doctors’ offices and general shelter-in-place guidance by governmental authorities negatively impacted retail pharmacy foot traffic in both Europe and Canada.

At March 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] we had [removed: $3.5] [added: $4.7] billion and [removed: $6.3] [added: $3.5] billion, respectively, in cash and cash equivalents.

The effect of a hypothetical 50 basis points increase in the underlying interest rate on our cash and cash equivalents, net of short-term [removed: borrowings,] [added: borrowings and fixed-to-floating interest rate swaps,] would not have resulted in a material impact to earnings in [removed: 2022] [added: fiscal 2023] or [removed: 2021.][added: fiscal 2022.]

*Foreign currency exchange rate risk:* We conduct our business worldwide in U.S. dollars and the functional currencies of our foreign subsidiaries, including [added: Canadian dollars,] Euro, [removed: British pound sterling,] and [removed: Canadian dollar.][added: British pounds sterling.]

We are also exposed to foreign currency exchange rate risk related to our foreign [added: currency-denominated notes and our foreign] subsidiaries, including intercompany loans denominated in non-functional currencies.

[removed: The forward contracts and] [added: We have certain foreign currency exchange rate risk programs that utilize] cross-currency swaps [added: which] are intended to reduce the income statement effects from fluctuations in foreign currency exchange rates and have been designated as cash flow [added: hedges or fair value] hedges.

[removed: As of] [added: At] March 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the effect of a hypothetical adverse 10% change in the [removed: underlying] foreign currency exchange rates [removed: would have impacted] [added: on underlying balances not reported in] the [removed: fair value] [added: functional currencies] of [removed: our foreign exchange contracts by approximately $122 million] [added: the Company] and [removed: $267 million, respectively.][added: these subsidiaries would not have resulted in a material impact to our earnings in fiscal 2023 or fiscal 2022.]

However, our risk management programs are designed such that [removed: the potential loss] [added: changes] in [added: the] value of [removed: these risk management portfolios described above] [added: the underlying exposure] would be largely offset by [added: the potential] changes in the value of the [removed: underlying exposure.][added: risk management portfolios.]

Refer to Financial Note [removed: 15,] [added: 14,] “Hedging Activities,” [added: to the consolidated financial statements included in this Annual Report] for more information on our [removed: foreign currency forward contracts and] cross-currency swaps.

Refer to Financial Note 2, [removed: “Held for Sale,”] [added: “Business Acquisitions and Divestitures,”] to the consolidated financial statements included in this Annual Report for more information on these divestitures.

[removed: Subsequent to the] [added: The] completion of these [removed: divestitures,] [added: divestitures has reduced] our foreign currency exchange rate risk [removed: will be primarily limited] [added: as it relates] to the [removed: Canadian dollar.][added: Euro and British pound sterling.]

The selected hypothetical change in interest rates and foreign currency exchange rates [added: described above] does not reflect what could be considered the best or worst case scenarios.

| [Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)] [added: Contents](#i04335d018da94076b0acf21e81ac886b_7)] | | | [Item 8 [removed: Index](#i4b4e3b23ed904498bf3396ff0593cb05_82)] [added: Index](#i04335d018da94076b0acf21e81ac886b_94)] | | |

At March 31, 2023, we also had fixed-to-floating interest rate swaps with a total notional amount of $1.3 billion.

The Company and its subsidiaries are also exposed to balances denominated in currencies other than their functional currency.

Refer to Financial Note 1, “Significant Accounting Policies,” under the section “*Foreign Currency Translation*” for more information regarding our exposure to transactional gains and losses.

We completed the divestitures of our Austrian business in January 2022, the U.K. disposal group in April 2022, and the E.U. disposal group in October 2022.

We have certain foreign currency exchange rate risk programs that use foreign currency forward contracts and cross-currency swaps.

[Table of Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)

McKESSON CORPORATION

During 2022, we entered into an agreement to sell certain of our businesses in the European Union which is anticipated to close within the second half of fiscal year 2023.

We also completed the sale of our Austrian business during 2022 and, on April 6, 2022, we completed the sale of our retail and distribution businesses in the United Kingdom.

[removed: Commencing with the second quarter of 2021, the] [added: The] Company operates its business in four reportable segments: U.S. Pharmaceutical, Prescription Technology Solutions (“RxTS”), Medical-Surgical Solutions, and International.

Our U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar and over-the-counter (“OTC”) pharmaceutical drugs, and other healthcare-related [removed: products.][added: products in the United States (“U.S.”).]

In addition, the segment sells financial, operational, and clinical solutions to pharmacies (retail, hospital, alternate [removed: site)] [added: sites)] and provides consulting, outsourcing, technological, and other services.

We offer more than 285,000 national brand medical-surgical products as well as McKesson’s own line of high-quality products through a network of distribution centers [removed: within] [added: in] the [removed: United States (“U.S.”).][added: U.S.]

Our International segment provides distribution and services to wholesale, institutional, and retail customers in [removed: 11 European countries] [added: Europe] and Canada where we own, [removed: partner] [added: partner,] or franchise with retail pharmacies, and support better, safer patient care by delivering vital medicines, supplies, and information technology solutions.

This business provides solutions and services to pharmacies, hospitals, oncology and other specialty practices, pharmaceutical manufacturers, biopharma partners, physicians, payers, and patients throughout the U.S. [removed: and Puerto Rico.][added: We also source generic pharmaceutical drugs through our ClarusONE Sourcing Services LLP joint venture with Walmart Inc. (“ClarusONE”).]

Our U.S. Pharmaceutical segment operates and serves customers through a network of 29 distribution [removed: centers,] [added: centers in the U.S.,] including two strategic redistribution centers.

We have four primary customer pharmaceutical distribution channels: (i) retail national accounts, which include national and regional [added: retail] chains, food and drug combinations, mail order pharmacies, and mass merchandisers, (ii) community pharmacies and health (formerly described as independent, small, and medium chain retail pharmacies), (iii) institutional healthcare providers such as hospitals, health systems, integrated delivery networks, and long-term care providers, and (iv) oncology, biopharma, and other specialty partners.

*Retail National Accounts:* We provide business solutions that help [added: our] retail national account customers increase revenues and profitability.

- Central FillSM [removed: -] [added: –] Prescription refill service that enables pharmacies to more quickly refill prescriptions remotely, more accurately, and at a lower cost, while reducing inventory levels and improving customer service.

- Strategic Redistribution Centers [removed: -] [added: –] Two facilities totaling over 740,000 square feet that offer access to inventory for single source warehouse purchasing, including pharmaceuticals and biologics.

- McKesson SynerGx® [removed: -] [added: –] Generic pharmaceutical purchasing program and inventory management that helps pharmacies maximize their cost savings with a broad selection of generic drugs, competitive pricing, and one-stop shopping.

- Inventory Management [removed: -] [added: –] An integrated solution [removed: comprising] [added: comprised of] forecasting software and automated replenishment technologies that reduce inventory-carrying costs.

- ExpressRx Track™ [removed: -] [added: –] Pharmacy automation solution featuring state-of-the-art robotics, upgraded imaging, and expanded vial capabilities, and industry-leading speed and accuracy in a small footprint.

- Health Mart® [removed: -] [added: –] A national network of approximately 4,700 independently-owned pharmacies and one of the industry’s most comprehensive pharmacy franchise programs.

Health Mart provides franchisees support for [added: operational excellence,] managed care contracting, [removed: branding and local marketing solutions, the Health Mart] [added: marketing, a] private label line of products, merchandising solutions, and [added: clinical] programs [removed: for enhanced] [added: to enhance] patient [removed: support.][added: care.]

- Health Mart Atlas® [removed: -] [added: –] Comprehensive managed care and reconciliation assistance services that help community pharmacies save time, access competitive reimbursement rates, and improve cash flow.

- McKesson Reimbursement AdvantageSM (“MRA”) [removed: -] [added: –] MRA is one of the industry’s most comprehensive reimbursement optimization packages, comprising financial services (automated claim resubmission), analytic services, and customer care.

- McKesson OneStop Generics® [removed: -] [added: –] Generic pharmaceutical purchasing program that helps pharmacies maximize their cost savings with a broad selection of generic drugs, competitive pricing, and one-stop shopping.

- FrontEdge™ [removed: -] [added: –] Strategic planning, merchandising, and price maintenance program that helps community pharmacies maximize store profitability.

- RxO Advisory Services – A suite of supply chain management, pharmacy optimization, and 340B program advisory [removed: services.][added: services driven by data and analytics.]

The U.S. Pharmaceutical segment provides a range of solutions to oncology and other specialty practices and offers community specialists (oncologists, rheumatologists, ophthalmologists, urologists, neurologists, and other specialists) an extensive set of customizable [removed: products] [added: solutions] and services designed to strengthen core practice operations, enhance value-based care delivery, and expand their service offering to patients.

This business provides a variety of solutions, including practice operations, healthcare information technology, revenue cycle management and managed care contracting solutions, evidence-based guidelines, and quality measurements to support [added: The] U.S. Oncology Network (“USON”), one of the nation’s largest networks of physician-led, integrated, community-based oncology practices dedicated to advancing high-quality, evidence-based cancer care.

This segment includes [removed: our Ontada business,] [added: Ontada®, McKesson’s oncology technology and insights business] providing software to support the clinical, financial, and operational needs of our oncology practice [removed: partners.][added: customers.]

[removed: This] [added: The U.S. Pharmaceutical] segment also offers solutions which enable its customers to drive greater efficiencies in their day to day operations, effectively managing their inventories and complying with complex government regulations.

Our Prescription Technology Solutions segment works across healthcare to connect [added: patients,] pharmacies, providers, [removed: payers,] [added: pharmacy benefit managers, health plans,] and biopharma companies to deliver medication [removed: access] [added: access, affordability,] and adherence solutions that support patients from first prescription fill to ongoing therapy, regardless of their insurance coverage.

RxTS has connections with most electronic health record systems, over 50,000 pharmacies, [removed: more than 750,000] [added: approximately 900,000] providers, most [removed: payers and] pharmacy benefit [removed: managers,] [added: managers] and [added: health plans, and has supported] over 650 biopharma brands representing most therapeutic areas.

Through its industry connections and ability to navigate the healthcare [removed: ecosystem,] [added: ecosystems,] RxTS [removed: accelerates] [added: offers] innovative solutions created to benefit healthcare stakeholders.

Its comprehensive solution suites span across the entire patient journey, including medication access and affordability, prescription decision [removed: support] [added: support, prescription price transparency, benefit insight] and dispensing support services, as well as third-party logistics and wholesale distribution support, to help increase speed to therapy, reduce prescription abandonment, and support improved health outcomes for the patient.

In the past year, RxTS helped patients save more than [removed: $6] [added: $8] billion on brand and specialty medications, helped to prevent [removed: more than 9] [added: an estimated 9.9] million prescriptions from being abandoned due to affordability challenges, and helped patients access their medicine more than [removed: 67] [added: 78] million times.

Through a network of distribution centers [removed: within] [added: in] the U.S., we offer more than 285,000 products from national brand manufacturers and McKesson’s own brand of high-quality products.

We develop customized plans to address the product, operational, and clinical support needs of our customers, including [removed: tackling] inventory management, reducing administrative burdens, and training and educating clinical staff.

Additionally, under contracts with the [added: U.S.] Department of Health and Human Services (“HHS”) and Pfizer, Inc., McKesson’s Medical-Surgical business leverages its expertise to manage the assembly, storage, and distribution of supply kits needed to administer COVID-19 vaccines, as well as some of the sourcing of those supplies.

Our International segment provides distribution and services to wholesale, institutional, and retail customers in [removed: 11 European countries] [added: Europe and Canada] where we own, partner, or franchise with retail [removed: pharmacies and operate through two businesses: Pharmaceutical Distribution and Retail Pharmacy.][added: pharmacies.]

Our operations in Canada [added: also] support better, safer patient care by delivering vital medicines, supplies, and information technology solutions to customers, and through several retail health and wellness brands, across Canada.

Our European Pharmaceutical Distribution business [removed: delivers] [added: delivered] pharmaceutical and other healthcare-related products to pharmacies across Europe.

This business [removed: functions] [added: functioned] as a vital link, using technology-enabled management systems at our regional wholesale branches to connect manufacturers to retail pharmacies, supplying medicines and other products sold in pharmacies.

Our European Retail Pharmacy business [removed: serves] [added: served] patients and consumers in European countries directly through [removed: approximately 2,000 of] our own pharmacies and [removed: 4,800] participant pharmacies operating under brand partnership arrangements.

This business [removed: provides] [added: provided] customers with traditional prescription pharmaceuticals, non-prescription products, and medical services, as well as e-commerce operating under the Lloyds pharmacy branding in Belgium, Ireland, and [removed: Italy.][added: Italy up until the sale of the E.U. disposal group.]

In addition, we [removed: partner] [added: partnered] with independent pharmacies under local banner programs.

INDEX TO BUSINESS

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| Section | | | Page | | |

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| [General](#i04335d018da94076b0acf21e81ac886b_4947802327005) | | | [3](#i04335d018da94076b0acf21e81ac886b_4947802327005) | | |

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| [Business Segments](#i04335d018da94076b0acf21e81ac886b_4947802326990) | | | [4](#i04335d018da94076b0acf21e81ac886b_4947802326990) | | |

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| [U.S. Pharmaceutical](#i04335d018da94076b0acf21e81ac886b_2189) | | | [4](#i04335d018da94076b0acf21e81ac886b_2189) | | |

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| [Prescription Technology Solutions](#i04335d018da94076b0acf21e81ac886b_2207) | | | [7](#i04335d018da94076b0acf21e81ac886b_2207) | | |

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| [Medical-Surgical Solutions](#i04335d018da94076b0acf21e81ac886b_2225) | | | [7](#i04335d018da94076b0acf21e81ac886b_2225) | | |

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| [International](#i04335d018da94076b0acf21e81ac886b_2243) | | | [7](#i04335d018da94076b0acf21e81ac886b_2243) | | |

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| [Restructuring, Business Combinations, Investments, and Divestitures](#i04335d018da94076b0acf21e81ac886b_4947802326975) | | | [8](#i04335d018da94076b0acf21e81ac886b_4947802326975) | | |

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| [Competition](#i04335d018da94076b0acf21e81ac886b_4947802327026) | | | [8](#i04335d018da94076b0acf21e81ac886b_4947802327026) | | |

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| [Patents, Trademarks, Copyrights, and Licenses](#i04335d018da94076b0acf21e81ac886b_2051) | | | [9](#i04335d018da94076b0acf21e81ac886b_2051) | | |

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| [Human Capital](#i04335d018da94076b0acf21e81ac886b_2068) | | | [9](#i04335d018da94076b0acf21e81ac886b_2068) | | |

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| [Government Regulation](#i04335d018da94076b0acf21e81ac886b_2085) | | | [11](#i04335d018da94076b0acf21e81ac886b_2085) | | |

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| [Other Information about the Business](#i04335d018da94076b0acf21e81ac886b_2102) | | | [13](#i04335d018da94076b0acf21e81ac886b_2102) | | |

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| [Forward-Looking Statements](#i04335d018da94076b0acf21e81ac886b_2119) | | | [14](#i04335d018da94076b0acf21e81ac886b_2119) | | |

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| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1 Index](#i04335d018da94076b0acf21e81ac886b_13) | | |

Our Prescription Technology Solutions segment helps solve medication access, affordability, and adherence challenges for patients by working across healthcare to connect patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies.

RxTS serves our biopharma and life sciences partners, delivering innovative solutions that help people get the medicine they need to live healthier lives.

RxTS also offers prescription price transparency, benefit insight, dispensing support services, third-party logistics, and wholesale distribution support designed to benefit stakeholders.

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| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1 Index](#i04335d018da94076b0acf21e81ac886b_13) | | |

*Community Pharmacy and Health:* We strengthen the overall health of community pharmacies and elevate the role they play in people’s lives.

The Company’s equity method investment in Change Healthcare LLC (“Change Healthcare JV”), which was split-off from McKesson in the fourth quarter of 2020, has been included in Other for retrospective periods presented.

Our Prescription Technology Solutions segment serves our biopharma and life sciences partners and patients.

RxTS addresses medication challenges for patients throughout their journeys by working across healthcare to connect pharmacies, providers, payers, and biopharma companies to deliver innovative access and adherence solutions as well as dispensing support services, third-party logistics and wholesale distribution support designed to benefit stakeholders.

[Table of Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)

We also source generic pharmaceutical drugs through our ClarusONE Sourcing Services LLP joint venture with Walmart (“ClarusONE”).

Solutions include:

*Community Pharmacy and Health:* We provide managed care contracting, branding and advertising, merchandising, purchasing, operational efficiency, and automation that help community pharmacists focus on patient care while improving profitability.

- Health Mart and Sunmark® - Complete line of products that provide community pharmacies with value-priced alternatives to national brands.

- McKesson RxOwnership Program - Assist independent pharmacist owners with the opportunity to remain independent via succession planning and business operation loans.

- Health Mart Digital Portfolio - Introducing an enhanced online experience for pharmacies and patients.

- McKesson Plasma and Biologics – A robust portfolio of plasma-derivatives and biologic products.

- Patient Assistance Solutions – Solutions and resources for patient financial assistance and community benefit programs.

We also support U.S. Oncology Research, one of the nation’s largest research networks, specializing in oncology clinical trials.

We also completed the sale of our Austrian business.

Of the owned and banner pharmacies referenced above, all except for approximately 300 owned and 100 partner pharmacies are included within these disposal groups.

Other:

*Change Healthcare:* Our equity ownership interest in the Change Healthcare JV, a joint venture, was accounted for using the equity method of accounting.

The Change Healthcare JV provided software and analytics, network solutions, and technology-enabled services that deliver wide-ranging financial, operational, and clinical benefits to payers, providers and consumers.

On March 10, 2020, we completed the separation of our interest in the Change Healthcare JV through a split-off transaction.

This transaction reduced our investment in the Change Healthcare JV to zero.

During 2022, we entered into an agreement to sell the E.U. disposal group which is expected to close within the second half of fiscal year 2023 and completed the sale of our Austrian business.

On April 6, 2022, we completed the sale of the U.K. disposal group.

At March 31, 2022, we had approximately 29,000 employees in Europe, including 11,000 part-time employees, the majority of whom we expect will be transferred with the E.U. disposal group and U.K. disposal group.

For fiscal year 2021, our metrics did not include our employees related to USON as the data was not available.

(3)Represents worldwide employees.

In North America, women represent 60% of “McKesson Overall” and 48% of “McKesson Leadership.”

The various responses we put in place to mitigate the impact of COVID-19 on our business operations, including telecommuting and work-from-home policies, restricted travel, and enhanced safety measures, are intended to limit employee exposure to the virus that causes COVID-19 as they perform their jobs while also providing employee support programs and a sense of belonging.

For additional information on our response to COVID-19 in the workplace, refer to the COVID-19 section of *“Trends and Uncertainties”* in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II included in this Annual Report.

A failure, or alleged failure, by the Company to comply with statutes, regulations, or other laws could have a material adverse impact to the Company’s business operations, reputation, results of operations, and financial and competitive position.

We have incurred monetary penalties and licensing sanctions pursuant to these requirements and future allegations of noncompliance could result in our inability to obtain, maintain, or renew permits, licenses, or other regulatory approvals needed for the operation of our businesses.

Additionally, the Company is a defendant in many litigation matters alleging claims related to its distribution of controlled substances (opioids), including claims about regulatory compliance.

On February 25, 2022, the Company and two other U.S. pharmaceutical distribution companies (collectively, "Distributors") determined that there is sufficient State and subdivision participation to proceed with an agreement to settle a substantial majority of opioids-related lawsuits filed against the Distributors by U.S. states, territories, and local governmental entities.

The Company incurs and expects to continue to incur significant expense in order to resolve those and other opioids-related matters.

As part of that resolution, the Company will bear a portion of the expense to establish and maintain a clearinghouse for data related to distribution of controlled substance.

If we fail to comply with these requirements, or we fail an audit, we may be subject to sanctions such as monetary damages, criminal and civil penalties, termination of contracts and suspension or debarment from government contract work.

Failure to comply with these laws, including the federal Anti-Kickback Statute, could subject us to federal or state government investigations or qui tam actions, and to liability for damages and civil and criminal penalties, including the loss of licenses or our ability to participate in Medicare, Medicaid and other federal and state healthcare programs, or pursue government contracts.

There are also further efforts to broaden healthcare coverage.

U.S. lawmakers also have explored proposals to reduce drug prices, including requiring greater price transparency, authorizing the federal government to negotiate prices for some drugs covered under the Medicare program, and drug importation measures.

Many European governments provide or subsidize healthcare to consumers and patients by regulating pharmaceutical prices, patient eligibility, or reimbursement levels to control government healthcare system costs.

European governments are continuously reviewing measures to support the reduction of public healthcare spending.

Certain legal proceedings in which we are involved are discussed in Financial Note [removed: 18,] [added: 17,] “Commitments and Contingent Liabilities,” to the consolidated financial statements included in this Annual Report.

[Table of Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)

McKESSON CORPORATION

[Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7)]

For the fiscal year ended March 31, [removed: 2022][added: 2023]

[removed: ][added: ]

[removed: (Address] [added: (Address] of principal executive offices, including zip [removed: code)][added: code)]

[removed: (Registrant’s] [added: (Registrant’s] telephone number, including area [removed: code)][added: code)]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter, September 30, [removed: 2021,] [added: 2022,] was approximately [removed: $30.4] [added: $48.2] billion.

Number of shares of common stock outstanding on April [removed: 29, 2022: 145,365,324][added: 28, 2023: 135,602,262]

Portions of the registrant’s Proxy Statement for its [removed: 2022] [added: calendar year 2023] Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

| 1A. | | | [Risk [removed: Factors](#i4b4e3b23ed904498bf3396ff0593cb05_16)] [added: Factors](#i04335d018da94076b0acf21e81ac886b_16)] | | | [removed: [14](#i4b4e3b23ed904498bf3396ff0593cb05_16)] [added: [14](#i04335d018da94076b0acf21e81ac886b_16)] | | |

| 1B. | | | [Unresolved Staff [removed: Comments](#i4b4e3b23ed904498bf3396ff0593cb05_19)] [added: Comments](#i04335d018da94076b0acf21e81ac886b_19)] | | | [removed: [26](#i4b4e3b23ed904498bf3396ff0593cb05_19)] [added: [25](#i04335d018da94076b0acf21e81ac886b_19)] | | |

| 3. | | | [Legal [removed: Proceedings](#i4b4e3b23ed904498bf3396ff0593cb05_25)] [added: Proceedings](#i04335d018da94076b0acf21e81ac886b_25)] | | | [removed: [26](#i4b4e3b23ed904498bf3396ff0593cb05_25)] [added: [25](#i04335d018da94076b0acf21e81ac886b_25)] | | |

| 4. | | | [Mine Safety [removed: Disclosures](#i4b4e3b23ed904498bf3396ff0593cb05_28)] [added: Disclosures](#i04335d018da94076b0acf21e81ac886b_28)] | | | [removed: [27](#i4b4e3b23ed904498bf3396ff0593cb05_28)] [added: [25](#i04335d018da94076b0acf21e81ac886b_28)] | | |

| | | | [Information about our Executive [removed: Officers](#i4b4e3b23ed904498bf3396ff0593cb05_31)] [added: Officers](#i04335d018da94076b0acf21e81ac886b_31)] | | | [removed: [28](#i4b4e3b23ed904498bf3396ff0593cb05_31)] [added: [26](#i04335d018da94076b0acf21e81ac886b_31)] | | |

| 5. | | | [Market [removed: for the Registrant's] [added: for](#i04335d018da94076b0acf21e81ac886b_37) [Registrant's] Common Equity, Related Stockholder [removed: Matters](#i4b4e3b23ed904498bf3396ff0593cb05_37)[,](#i4b4e3b23ed904498bf3396ff0593cb05_37) [and](#i4b4e3b23ed904498bf3396ff0593cb05_37)] [added: Matters, and](#i04335d018da94076b0acf21e81ac886b_37)] [Issuer Purchases of Equity [removed: Securities](#i4b4e3b23ed904498bf3396ff0593cb05_37)] [added: Securities](#i04335d018da94076b0acf21e81ac886b_37)] | | | [removed: [29](#i4b4e3b23ed904498bf3396ff0593cb05_37)] [added: [27](#i04335d018da94076b0acf21e81ac886b_37)] | | |

| 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i4b4e3b23ed904498bf3396ff0593cb05_46)] [added: Operations](#i04335d018da94076b0acf21e81ac886b_43)] | | | [removed: [32](#i4b4e3b23ed904498bf3396ff0593cb05_46)] [added: [30](#i04335d018da94076b0acf21e81ac886b_43)] | | |

| 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i4b4e3b23ed904498bf3396ff0593cb05_79)] [added: Risk](#i04335d018da94076b0acf21e81ac886b_91)] | | | [removed: [61](#i4b4e3b23ed904498bf3396ff0593cb05_79)] [added: [58](#i04335d018da94076b0acf21e81ac886b_91)] | | |

| 8. | | | [Financial Statements and Supplementary [removed: Data](#i4b4e3b23ed904498bf3396ff0593cb05_82)] [added: Data](#i04335d018da94076b0acf21e81ac886b_94)] | | | [removed: [63](#i4b4e3b23ed904498bf3396ff0593cb05_82)] [added: [59](#i04335d018da94076b0acf21e81ac886b_94)] | | |

| 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i4b4e3b23ed904498bf3396ff0593cb05_178)] [added: Disclosure](#i04335d018da94076b0acf21e81ac886b_184)] | | | [removed: [137](#i4b4e3b23ed904498bf3396ff0593cb05_178)] [added: [134](#i04335d018da94076b0acf21e81ac886b_184)] | | |

| 9A. | | | [Controls and [removed: Procedures](#i4b4e3b23ed904498bf3396ff0593cb05_181)] [added: Procedures](#i04335d018da94076b0acf21e81ac886b_187)] | | | [removed: [137](#i4b4e3b23ed904498bf3396ff0593cb05_181)] [added: [134](#i04335d018da94076b0acf21e81ac886b_187)] | | |

| 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i4b4e3b23ed904498bf3396ff0593cb05_1968)] [added: Inspections](#i04335d018da94076b0acf21e81ac886b_193)] | | | [removed: [137](#i4b4e3b23ed904498bf3396ff0593cb05_1968)] [added: [134](#i04335d018da94076b0acf21e81ac886b_193)] | | |

| 10. | | | [Directors, Executive [removed: Officers](#i4b4e3b23ed904498bf3396ff0593cb05_190)[,](#i4b4e3b23ed904498bf3396ff0593cb05_190) [and] [added: Officers, and] Corporate [removed: Governance](#i4b4e3b23ed904498bf3396ff0593cb05_190)] [added: Governance](#i04335d018da94076b0acf21e81ac886b_199)] | | | [removed: [137](#i4b4e3b23ed904498bf3396ff0593cb05_190)] [added: [134](#i04335d018da94076b0acf21e81ac886b_199)] | | |

| 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i4b4e3b23ed904498bf3396ff0593cb05_196)] [added: Matters](#i04335d018da94076b0acf21e81ac886b_205)] | | | [removed: [138](#i4b4e3b23ed904498bf3396ff0593cb05_196)] [added: [135](#i04335d018da94076b0acf21e81ac886b_205)] | | |

| 13. | | | [Certain Relationships and Related [removed: Transactions and] [added: Transactions](#i04335d018da94076b0acf21e81ac886b_208)[,](#i04335d018da94076b0acf21e81ac886b_208) [and] Director [removed: Independence](#i4b4e3b23ed904498bf3396ff0593cb05_199)] [added: Independence](#i04335d018da94076b0acf21e81ac886b_208)] | | | [removed: [140](#i4b4e3b23ed904498bf3396ff0593cb05_199)] [added: [137](#i04335d018da94076b0acf21e81ac886b_208)] | | |

| 15. | | | [Exhibits and Financial Statement [removed: Schedule](#i4b4e3b23ed904498bf3396ff0593cb05_208)] [added: Schedule](#i04335d018da94076b0acf21e81ac886b_217)] | | | [removed: [141](#i4b4e3b23ed904498bf3396ff0593cb05_208)] [added: [138](#i04335d018da94076b0acf21e81ac886b_217)] | | |

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

[Table of Contents](#i04335d018da94076b0acf21e81ac886b_7)

| | | | [PART I](#i04335d018da94076b0acf21e81ac886b_10) | | | | | |

| 1. | | | [Business](#i04335d018da94076b0acf21e81ac886b_13) | | | [3](#i04335d018da94076b0acf21e81ac886b_13) | | |

| 2. | | | [Properties](#i04335d018da94076b0acf21e81ac886b_22) | | | [25](#i04335d018da94076b0acf21e81ac886b_22) | | |

| | | | [PART II](#i04335d018da94076b0acf21e81ac886b_34) | | | | | |

| 6. | | | [Reserved](#i04335d018da94076b0acf21e81ac886b_40) | | | [29](#i04335d018da94076b0acf21e81ac886b_40) | | |

| 9B. | | | [Other Information](#i04335d018da94076b0acf21e81ac886b_190) | | | [134](#i04335d018da94076b0acf21e81ac886b_190) | | |

| | | | [PART III](#i04335d018da94076b0acf21e81ac886b_196) | | | | | |

| 11. | | | [Executive Compensation](#i04335d018da94076b0acf21e81ac886b_202) | | | [135](#i04335d018da94076b0acf21e81ac886b_202) | | |

| 14. | | | [Principal Account](#i04335d018da94076b0acf21e81ac886b_211)[ant](#i04335d018da94076b0acf21e81ac886b_211) [Fees and Services](#i04335d018da94076b0acf21e81ac886b_211) | | | [137](#i04335d018da94076b0acf21e81ac886b_211) | | |

| | | | [PART IV](#i04335d018da94076b0acf21e81ac886b_214) | | | | | |

| 16. | | | [Form 10-K Summary](#i04335d018da94076b0acf21e81ac886b_226) | | | [143](#i04335d018da94076b0acf21e81ac886b_226) | | |

| | | | [Signatures](#i04335d018da94076b0acf21e81ac886b_229) | | | [144](#i04335d018da94076b0acf21e81ac886b_229) | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 1 Index](#i04335d018da94076b0acf21e81ac886b_13) | | |

| | | | [PART I](#i4b4e3b23ed904498bf3396ff0593cb05_10) | | | | | |

| 1. | | | [Business](#i4b4e3b23ed904498bf3396ff0593cb05_13) | | | [3](#i4b4e3b23ed904498bf3396ff0593cb05_13) | | |

| 2. | | | [Properties](#i4b4e3b23ed904498bf3396ff0593cb05_22) | | | [26](#i4b4e3b23ed904498bf3396ff0593cb05_22) | | |

| | | | [PART II](#i4b4e3b23ed904498bf3396ff0593cb05_34) | | | | | |

| 6. | | | [Reserved](#i4b4e3b23ed904498bf3396ff0593cb05_40) | | | [31](#i4b4e3b23ed904498bf3396ff0593cb05_40) | | |

| 9B. | | | [Other Information](#i4b4e3b23ed904498bf3396ff0593cb05_184) | | | [137](#i4b4e3b23ed904498bf3396ff0593cb05_184) | | |

| | | | [PART III](#i4b4e3b23ed904498bf3396ff0593cb05_187) | | | | | |

| 11. | | | [Executive Compensation](#i4b4e3b23ed904498bf3396ff0593cb05_193) | | | [138](#i4b4e3b23ed904498bf3396ff0593cb05_193) | | |

| 14. | | | [Principal Accounting Fees and Services](#i4b4e3b23ed904498bf3396ff0593cb05_202) | | | [140](#i4b4e3b23ed904498bf3396ff0593cb05_202) | | |

| | | | [PART IV](#i4b4e3b23ed904498bf3396ff0593cb05_205) | | | | | |

| 16. | | | [Form 10-K Summary](#i4b4e3b23ed904498bf3396ff0593cb05_217) | | | [147](#i4b4e3b23ed904498bf3396ff0593cb05_217) | | |

| | | | [Signatures](#i4b4e3b23ed904498bf3396ff0593cb05_220) | | | [148](#i4b4e3b23ed904498bf3396ff0593cb05_220) | | |

Because of the nature of our principal businesses, our plant, warehousing, retail pharmacies, [removed: office,] [added: offices,] and other facilities are operated in widely dispersed locations, primarily throughout North [removed: America and Europe.][added: America.]

Information as to material lease commitments is included in Financial Note [removed: 10,] [added: 9,] “Leases,” to the consolidated financial statements included in this Annual Report.

As of March 31, [removed: 2022,] [added: 2023,] the majority of our properties in Europe [removed: are expected to be] [added: were] divested and [removed: are classified as Assets held for sale] [added: our remaining business operations reside] in [removed: the Company’s Consolidated Balance Sheet,] [added: Norway,] as discussed in more detail in Financial Note 2, [removed: “Held for Sale,”] [added: “Business Acquisitions and Divestitures,”] to the consolidated financial statements included in this Annual Report.

During the first quarter of [added: fiscal] 2022, we approved an initiative to increase operational efficiencies and flexibility by transitioning to a partial remote work model for certain employees.

This initiative was substantially completed in [added: fiscal] 2022.

[added: |] [Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7) | | |]

The term of office of each executive officer expires at the first meeting of the Board of Directors [removed: (“Board”)] [added: (the “Board”)] following the annual meeting of shareholders, or until their successors are elected and have qualified, or until death, resignation, or removal, whichever is sooner.

| Brian S. Tyler | | | | | | [removed: 55] [added: 56] | | | | | | Chief Executive Officer and a director since April 2019; President and Chief Operating Officer from August 2018 to March 2019; Chairman of the Management Board of McKesson Europe AG from 2017 to 2018; President and Chief Operating Officer, McKesson Europe from 2016 to 2017; President of North America Distribution and Services from 2015 to 2016; and Executive Vice President, Corporate Strategy and Business Development from 2012 to 2015. Service with the Company - [removed: 25] [added: 26] years. | | |

| Britt J. Vitalone | | | | | | [removed: 53] [added: 54] | | | | | | Executive Vice President and Chief Financial Officer since January 2018; Senior Vice President and Chief Financial Officer, U.S. Pharmaceutical from July 2014 to December 2017; Senior Vice President and Chief Financial Officer, U.S. Pharmaceutical and Specialty Health from October 2017 to December 2017; Senior Vice President of Corporate Finance and M&A Finance from March 2012 to June 2014. Service with the Company - [removed: 16] [added: 17] years. | | |

| [removed: Tracy] [added: Thomas] L. [removed: Faber] [added: Rodgers] | | | | | | 52 | | | | | | Executive Vice [removed: President and] [added: President,] Chief [removed: Human Resources] [added: Strategy and Business Development] Officer since [removed: October 2019.] [added: June 2020.] Previously, Senior Vice President [added: and Managing Director] of [removed: Human Resources.] [added: McKesson Ventures from 2014 to 2020.] Service with the Company - [removed: 11] [added: 9] years. | | |

| Nancy [removed: Flores] [added: Avila] | | | | | | [removed: 55] [added: 56] | | | | | | Executive Vice President, Chief Information Officer and Chief Technology Officer since January 2020. Chief Information Officer, Johnson Controls from 2018 to July 2019. Corporate Officer and Vice President of Business and Technology Services, Abbott Laboratories from 1996 to 2018. Service with the Company - [removed: 2] [added: 3] years. | | |

| Lori A. Schechter | | | | | | [removed: 60] [added: 61] | | | | | | Executive Vice President, Chief Legal Officer and General Counsel since June 2014. Associate General Counsel from January 2012 to June 2014. Litigation Partner, Morrison & Foerster LLP from 1995 to December 2011. Service with the Company - [removed: 10] [added: 11] years. | | |

| | | |

| --- | --- | --- |

| LeAnn B. Smith | | | | | | 48 | | | | | | Executive Vice President and Chief Human Resources Officer since December 2022. Previously, Senior Vice President, Talent Management and Development from 2021 to 2022. Chief People Leader, Global Corporate Functions for Walmart Inc. from 2018 to 2021. Service with the Company - 2 years. | | |

| | | |

| --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | |

| Thomas L. Rodgers | | | | | | 51 | | | | | | Executive Vice President, Chief Strategy and Business Development Officer since June 2020. Previously, Senior Vice President and Managing Director of McKesson Ventures from 2014 to 2020. Service with the Company - 8 years. | | |

*Market Information:* The principal market on which our common stock is traded is the New York Stock Exchange (“NYSE”) under the trading symbol [removed: of] “MCK.”

*Holders:* At March 31, [removed: 2022,] [added: 2023,] there were [removed: 4,636] [added: 4,425] holders of record of our common stock.

*Dividends:* In July [removed: 2021,] [added: 2022,] our quarterly dividend was raised from [removed: $0.42 to] $0.47 [added: to $0.54] per common share for dividends declared on or after such date by the Board.

We declared regular cash dividends of [added: $2.09,] $1.83, [removed: $1.67,] and [removed: $1.62] [added: $1.67] per share for the years ended March 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020,] [added: 2021,] respectively.

*Securities Authorized for Issuance under Equity Compensation Plans:* Information relating to this item is provided under [removed: Part III,] Item [removed: 12, to] [added: 12 of Part III included in] this Annual Report.

[removed: *Share Repurchase Plans:*] Stock repurchases may be made from time-to-time in open market transactions, privately negotiated transactions, through accelerated share repurchase (“ASR”) programs, or by combinations of such methods, any of which may use pre-arranged trading plans that are designed to meet the requirements of Rule 10b5-1(c) of the Securities Exchange Act of [removed: 1934.][added: 1934, as amended.]

The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, corporate and regulatory requirements, [added: tax implications,] restrictions under the Company’s debt obligations, and other market and economic conditions.

During the last three [added: fiscal] years, our share repurchases were transacted through both open market transactions and ASR programs with third-party financial institutions.

[added: |] [Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7) | | |]

| *(In millions, except price per [removed: share data)*] [added: share)*] | | | | | | Total Number of Shares Purchased (2) | | | | | | Average Price Paid Per Share | | | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs | | |

| Shares repurchased - Open market [added: (5)] | | | | | | [removed: 9.2] [added: 4.7] | | | | | | $ | [removed: 144.68] [added: 363.24] | | | | | [removed: (1,334)] [added: (1,693)] | | |

| Balance, March 31, 2020 | | | | | | | | | | | | | | | | | | [removed: 1,535] [added: $] | [added: 1,535] | |

| [removed: Shares] [added: Share] repurchase authorization increase in [added: fiscal] 2021 | | | | | | | | | | | | | | | | | | 2,000 | | |

| [removed: Shares] [added: Share] repurchase authorization increase in [added: fiscal] 2022 | | | | | | | | | | | | | | | | | | 4,000 | | |

| Balance, March 31, 2022 | | | | | | | | | | | | | | | | | | [removed: $ |] 3,278 | | [added: |]

[removed: (3)Of] [added: (5)Of] the total dollar value, [removed: $8] [added: $27] million was accrued within “Other accrued liabilities” in our Consolidated Balance Sheet as of March 31, [removed: 2021] [added: 2023] for share repurchases that were executed in late March [added: 2023] and settled in early [removed: April.][added: April 2023.]

(4)In February 2022, [removed: the Company] [added: we] entered into an ASR program with a third-party financial institution to repurchase $1.5 billion of the Company’s common stock.

The following table provides information on our share repurchases during the fourth quarter of [removed: 2022:][added: fiscal 2023:]

| *(In millions, except price per share)* | | | Total Number of Shares Purchased | | | | | | Average Price Paid per Share (2) | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Programs [added: (3)] | | | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs | | |

| January 1, [removed: 2022] [added: 2023] - January 31, [removed: 2022] [added: 2023] | | | — | | | | | | $ | — | | | | | — | | | | | | $ | [removed: 4,778] [added: 3,778] | |

[removed: ][added: ]

| | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2022] [added: 2023] | | |

* Assumes $100 invested in McKesson Common Stock and in each index on March 31, [removed: 2017] [added: 2018] and that all dividends are reinvested.

*Share Repurchase Plans:* The Board has authorized the repurchase of McKesson’s common stock.

The ASR programs discussed below were designed to comply with Rule 10b5-1(c).

| | | |

| --- | --- | --- |

The following table provides information on our share repurchases for the last three fiscal years:

| Shares repurchased - February 2022 ASR (4) | | | | | | 0.3 | | | | | | $ | 295.16 | | | | | — | | |

| Shares repurchased - May 2022 ASR | | | | | | 3.1 | | | | | | $ | 321.05 | | | | | (1,000) | | |

| Share repurchase authorization increase in fiscal 2023 | | | | | | | | | | | | | | | | | | 4,000 | | |

| Shares repurchased - December 2022 ASR | | | | | | 2.6 | | | | | | $ | 369.20 | | | | | (972) | | |

| Balance, March 31, 2023 | | | | | | | | | | | | | | | | | | $ | 3,613 | |

(3)Of the total dollar value, $8 million was accrued within “Other accrued liabilities” in our Consolidated Balance Sheet as of March 31, 2021, included in our Annual Report on Form 10-K for the year ended March 31, 2022, for share repurchases that were executed in late March 2021 and settled in early April 2021.

The total number of shares repurchased under this ASR program was 5.1 million shares at an average price per share of $295.16.

We received 4.8 million shares as the initial share settlement in the fourth quarter of fiscal 2022 based on an initial share purchase price, and in May 2022, we received an additional 0.3 million shares upon the completion of this ASR program.

| February 1, 2023 - February 28, 2023 | | | 0.4 | | | | | | 369.20 | | | | | | 0.4 | | | | | | 3,778 | | |

| March 1, 2023 - March 31, 2023 | | | 0.5 | | | | | | 347.09 | | | | | | 0.5 | | | | | | 3,613 | | |

| Total | | | 0.9 | | | | | | | | | | | | 0.9 | | | | | | | | |

| | | |

| --- | --- | --- |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | |

(2)In December 2022, we entered into an ASR program with a third-party financial institution to repurchase $972 million of the Company’s common stock.

The total number of shares repurchased under this ASR program was 2.6 million shares at an average price per share of $369.20.

We received 2.2 million shares as the initial share settlement in the third quarter of fiscal 2023, and in February 2023, we received an additional 0.4 million shares upon the completion of this ASR program.

(3)In July 2022, the Board authorized the Company to repurchase up to an additional $4.0 billion of its common shares in a manner deemed in the best interest of the Company and its stockholders, considering other growth opportunities and prevailing business and market conditions.

The authorization has no expiration date.

| McKesson Corporation | | | $ | 100.00 | | | | | $ | 84.06 | | | | | $ | 98.27 | | | | | $ | 143.15 | | | | | $ | 226.57 | | | | | $ | 265.05 | |

| S&P 500 Index | | | $ | 100.00 | | | | | $ | 109.50 | | | | | $ | 101.86 | | | | | $ | 159.25 | | | | | $ | 184.17 | | | | | $ | 169.94 | |

| S&P 500 Health Care Index | | | $ | 100.00 | | | | | $ | 114.89 | | | | | $ | 113.73 | | | | | $ | 152.44 | | | | | $ | 181.55 | | | | | $ | 174.83 | |

| Balance, March 31, 2019 | | | | | | | | | | | | | | | | | | $ | 3,469 | |

| Shares repurchased - May 2019 ASR | | | | | | 4.7 | | | | | | $ | 127.68 | | | | | (600) | | |

It also excludes shares related to our split-off of the Change Healthcare JV as described in Financial Note 19, “Stockholders' Equity (Deficit)” to the consolidated financial statements included in this Annual Report.

The average price paid per share and total number of shares purchased under this program are estimates based on the initial share purchase price and initial delivery of shares under an ASR agreement and may differ from the average price paid per share and total number of shares purchased under the ASR program upon its final settlement in May 2022.

| February 1, 2022 - February 28, 2022 | | | 4.8 | | | | | | 265.56 | | | | | | 4.8 | | | | | | 3,278 | | |

| March 1, 2022 - March 31, 2022 | | | — | | | | | | — | | | | | | — | | | | | | 3,278 | | |

| Total | | | 4.8 | | | | | | | | | | | | 4.8 | | | | | | | | |

(2)The average price paid per share and total number of shares purchased under this program are estimates based on the initial share purchase price and initial delivery of shares under an ASR agreement and may differ from the average price paid per share and total number of shares purchased under the ASR program upon its final settlement in May 2022.

| McKesson Corporation | | | $ | 100.00 | | | | | $ | 95.83 | | | | | $ | 80.55 | | | | | $ | 94.18 | | | | | $ | 137.19 | | | | | $ | 217.12 | |

| S&P 500 Index | | | $ | 100.00 | | | | | $ | 113.99 | | | | | $ | 124.82 | | | | | $ | 116.11 | | | | | $ | 181.54 | | | | | $ | 209.94 | |

| S&P 500 Health Care Index | | | $ | 100.00 | | | | | $ | 111.27 | | | | | $ | 127.84 | | | | | $ | 126.55 | | | | | $ | 169.62 | | | | | $ | 202.01 | |

| [Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)] [added: Contents](#i04335d018da94076b0acf21e81ac886b_7)] | | | [MD&A [removed: Index](#i4b4e3b23ed904498bf3396ff0593cb05_46)] [added: Index](#i04335d018da94076b0acf21e81ac886b_43)] | | |

| [Management's Annual Report on Internal Control Over Financial [removed: Reporting](#i4b4e3b23ed904498bf3396ff0593cb05_85)] [added: Reporting](#i04335d018da94076b0acf21e81ac886b_97)] | | | [removed: [64](#i4b4e3b23ed904498bf3396ff0593cb05_85)] [added: [60](#i04335d018da94076b0acf21e81ac886b_97)] | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#i4b4e3b23ed904498bf3396ff0593cb05_88)] [added: Firm](#i04335d018da94076b0acf21e81ac886b_100)] | | | [removed: [65](#i4b4e3b23ed904498bf3396ff0593cb05_88)] [added: [61](#i04335d018da94076b0acf21e81ac886b_100)] | | |

| [Consolidated Statements of Operations for the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_91)[2](#i4b4e3b23ed904498bf3396ff0593cb05_91)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_91)[1](#i4b4e3b23ed904498bf3396ff0593cb05_91)[,] [added: 2023, 2022,] and [removed: 20](#i4b4e3b23ed904498bf3396ff0593cb05_91)[20](#i4b4e3b23ed904498bf3396ff0593cb05_91)] [added: 2021](#i04335d018da94076b0acf21e81ac886b_103)] | | | [removed: [70](#i4b4e3b23ed904498bf3396ff0593cb05_91)] [added: [65](#i04335d018da94076b0acf21e81ac886b_103)] | | |

| [Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_94)[2](#i4b4e3b23ed904498bf3396ff0593cb05_94)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_94)[1](#i4b4e3b23ed904498bf3396ff0593cb05_94)[,](#i4b4e3b23ed904498bf3396ff0593cb05_94) [and 20](#i4b4e3b23ed904498bf3396ff0593cb05_94)[20](#i4b4e3b23ed904498bf3396ff0593cb05_94)] [added: 2023, 2022, and 2021](#i04335d018da94076b0acf21e81ac886b_106)] | | | [removed: [71](#i4b4e3b23ed904498bf3396ff0593cb05_94)] [added: [66](#i04335d018da94076b0acf21e81ac886b_106)] | | |

| [Consolidated Balance Sheets as of March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_97)[2](#i4b4e3b23ed904498bf3396ff0593cb05_97) [and 202](#i4b4e3b23ed904498bf3396ff0593cb05_97)[1](#i4b4e3b23ed904498bf3396ff0593cb05_97)] [added: 2023 and 2022](#i04335d018da94076b0acf21e81ac886b_109)] | | | [removed: [72](#i4b4e3b23ed904498bf3396ff0593cb05_97)] [added: [67](#i04335d018da94076b0acf21e81ac886b_109)] | | |

| [Consolidated Statements of Stockholders’ [removed: Equity](#i4b4e3b23ed904498bf3396ff0593cb05_100) [(Deficit)](#i4b4e3b23ed904498bf3396ff0593cb05_100) [for] [added: Equity (Deficit) for] the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_100)[2](#i4b4e3b23ed904498bf3396ff0593cb05_100)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_100)[1](#i4b4e3b23ed904498bf3396ff0593cb05_100)[,] [added: 2023, 2022,] and [removed: 20](#i4b4e3b23ed904498bf3396ff0593cb05_100)[20](#i4b4e3b23ed904498bf3396ff0593cb05_100)] [added: 2021](#i04335d018da94076b0acf21e81ac886b_112)] | | | [removed: [73](#i4b4e3b23ed904498bf3396ff0593cb05_100)] [added: [68](#i04335d018da94076b0acf21e81ac886b_112)] | | |

| [Consolidated Statements of Cash Flows for the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_103)[2](#i4b4e3b23ed904498bf3396ff0593cb05_103)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_103)[1](#i4b4e3b23ed904498bf3396ff0593cb05_103)[,] [added: 2023, 2022,] and [removed: 20](#i4b4e3b23ed904498bf3396ff0593cb05_103)[20](#i4b4e3b23ed904498bf3396ff0593cb05_103)] [added: 2021](#i04335d018da94076b0acf21e81ac886b_115)] | | | [removed: [74](#i4b4e3b23ed904498bf3396ff0593cb05_103)] [added: [69](#i04335d018da94076b0acf21e81ac886b_115)] | | |

[removed: | [Financial Notes](#i4b4e3b23ed904498bf3396ff0593cb05_106) | | | [75](#i4b4e3b23ed904498bf3396ff0593cb05_106) | | |][added: FINANCIAL NOTES (Continued)]

| [Note 1 - Significant Accounting [removed: Policies](#i4b4e3b23ed904498bf3396ff0593cb05_109)] [added: Policies](#i04335d018da94076b0acf21e81ac886b_121)] | | | [removed: [75](#i4b4e3b23ed904498bf3396ff0593cb05_109)] [added: [70](#i04335d018da94076b0acf21e81ac886b_121)] | | |

| [Note 3 - Restructuring, Impairment, and Related Charges, [removed: Net](#i4b4e3b23ed904498bf3396ff0593cb05_118)] [added: Net](#i04335d018da94076b0acf21e81ac886b_127)] | | | [removed: [86](#i4b4e3b23ed904498bf3396ff0593cb05_118)] [added: [84](#i04335d018da94076b0acf21e81ac886b_127)] | | |

| [removed: [Note](#i4b4e3b23ed904498bf3396ff0593cb05_121) [4](#i4b4e3b23ed904498bf3396ff0593cb05_121) [-] [added: [Note 2 -] Business Acquisitions and [removed: Divestitures](#i4b4e3b23ed904498bf3396ff0593cb05_121)] [added: Divestitures](#i04335d018da94076b0acf21e81ac886b_124)] | | | [removed: [89](#i4b4e3b23ed904498bf3396ff0593cb05_121)] [added: [78](#i04335d018da94076b0acf21e81ac886b_124)] | | |

| [removed: [Note](#i4b4e3b23ed904498bf3396ff0593cb05_124) [5](#i4b4e3b23ed904498bf3396ff0593cb05_124) [-] [added: [Note 4 -] Share-Based [removed: Compensation](#i4b4e3b23ed904498bf3396ff0593cb05_124)] [added: Compensation](#i04335d018da94076b0acf21e81ac886b_133)] | | | [removed: [91](#i4b4e3b23ed904498bf3396ff0593cb05_124)] [added: [87](#i04335d018da94076b0acf21e81ac886b_133)] | | |

| [removed: [Note](#i4b4e3b23ed904498bf3396ff0593cb05_127) [6](#i4b4e3b23ed904498bf3396ff0593cb05_127) [-] [added: [Note 5 -] Other Income, [removed: Net](#i4b4e3b23ed904498bf3396ff0593cb05_127)] [added: Net](#i04335d018da94076b0acf21e81ac886b_136)] | | | [removed: [95](#i4b4e3b23ed904498bf3396ff0593cb05_127)] [added: [91](#i04335d018da94076b0acf21e81ac886b_136)] | | |

| [removed: [Note](#i4b4e3b23ed904498bf3396ff0593cb05_130) [7](#i4b4e3b23ed904498bf3396ff0593cb05_130) [-] [added: [Note 6 -] Income [removed: Taxes](#i4b4e3b23ed904498bf3396ff0593cb05_130)] [added: Taxes](#i04335d018da94076b0acf21e81ac886b_139)] | | | [removed: [95](#i4b4e3b23ed904498bf3396ff0593cb05_130)] [added: [91](#i04335d018da94076b0acf21e81ac886b_139)] | | |

| [removed: [Note](#i4b4e3b23ed904498bf3396ff0593cb05_133) [8](#i4b4e3b23ed904498bf3396ff0593cb05_133) [-] [added: [Note 7 -] Redeemable Noncontrolling Interests and Noncontrolling [removed: Interests](#i4b4e3b23ed904498bf3396ff0593cb05_133)] [added: Interests](#i04335d018da94076b0acf21e81ac886b_142)] | | | [removed: [99](#i4b4e3b23ed904498bf3396ff0593cb05_133)] [added: [95](#i04335d018da94076b0acf21e81ac886b_142)] | | |

| [removed: [Note](#i4b4e3b23ed904498bf3396ff0593cb05_136) [9](#i4b4e3b23ed904498bf3396ff0593cb05_136) [- Earnings](#i4b4e3b23ed904498bf3396ff0593cb05_136) [(Loss)](#i4b4e3b23ed904498bf3396ff0593cb05_136) [per] [added: [Note 8 - Earnings (Loss) Per] Common [removed: Share](#i4b4e3b23ed904498bf3396ff0593cb05_136)] [added: Share](#i04335d018da94076b0acf21e81ac886b_145)] | | | [removed: [100](#i4b4e3b23ed904498bf3396ff0593cb05_136)] [added: [97](#i04335d018da94076b0acf21e81ac886b_145)] | | |

| [Note [removed: 1](#i4b4e3b23ed904498bf3396ff0593cb05_142)[1](#i4b4e3b23ed904498bf3396ff0593cb05_142) [-] [added: 10 -] Goodwill and Intangible Assets, [removed: Net](#i4b4e3b23ed904498bf3396ff0593cb05_142)] [added: Net](#i04335d018da94076b0acf21e81ac886b_151)] | | | [removed: [104](#i4b4e3b23ed904498bf3396ff0593cb05_142)] [added: [100](#i04335d018da94076b0acf21e81ac886b_151)] | | |

| [Note [removed: 1](#i4b4e3b23ed904498bf3396ff0593cb05_145)[2](#i4b4e3b23ed904498bf3396ff0593cb05_145) [-] [added: 11 -] Debt and Financing [removed: Activities](#i4b4e3b23ed904498bf3396ff0593cb05_145)] [added: Activities](#i04335d018da94076b0acf21e81ac886b_154)] | | | [removed: [107](#i4b4e3b23ed904498bf3396ff0593cb05_145)] [added: [103](#i04335d018da94076b0acf21e81ac886b_154)] | | |

| [Note [removed: 1](#i4b4e3b23ed904498bf3396ff0593cb05_148)[3](#i4b4e3b23ed904498bf3396ff0593cb05_148) [-] [added: 12 -] Variable Interest [removed: Entities](#i4b4e3b23ed904498bf3396ff0593cb05_148)] [added: Entities](#i04335d018da94076b0acf21e81ac886b_157)] | | | [removed: [109](#i4b4e3b23ed904498bf3396ff0593cb05_148)] [added: [106](#i04335d018da94076b0acf21e81ac886b_157)] | | |

| [Note [removed: 1](#i4b4e3b23ed904498bf3396ff0593cb05_157)[6](#i4b4e3b23ed904498bf3396ff0593cb05_157) [-] [added: 15 -] Fair Value [removed: Measurements](#i4b4e3b23ed904498bf3396ff0593cb05_157)] [added: Measurements](#i04335d018da94076b0acf21e81ac886b_166)] | | | [removed: [119](#i4b4e3b23ed904498bf3396ff0593cb05_157)] [added: [116](#i04335d018da94076b0acf21e81ac886b_166)] | | |

| [Note [removed: 1](#i4b4e3b23ed904498bf3396ff0593cb05_160)[7](#i4b4e3b23ed904498bf3396ff0593cb05_160) [-] [added: 16 -] Financial Guarantees and [removed: Warranties](#i4b4e3b23ed904498bf3396ff0593cb05_160)] [added: Warranties](#i04335d018da94076b0acf21e81ac886b_169)] | | | [removed: [121](#i4b4e3b23ed904498bf3396ff0593cb05_160)] [added: [119](#i04335d018da94076b0acf21e81ac886b_169)] | | |

| [removed: [Note 1](#i4b4e3b23ed904498bf3396ff0593cb05_163)[8](#i4b4e3b23ed904498bf3396ff0593cb05_163) [-] Commitments and [removed: Contingent Liabilities](#i4b4e3b23ed904498bf3396ff0593cb05_163)] [added: contingent liabilities (Note 17)] | | | [removed: [122](#i4b4e3b23ed904498bf3396ff0593cb05_163)] | | | [added: | | | | | |]

| [removed: [Note](#i4b4e3b23ed904498bf3396ff0593cb05_169) [20](#i4b4e3b23ed904498bf3396ff0593cb05_169) [-] [added: [Note 19 -] Related Party Balances and [removed: Transactions](#i4b4e3b23ed904498bf3396ff0593cb05_169)] [added: Transactions](#i04335d018da94076b0acf21e81ac886b_178)] | | | [removed: [132](#i4b4e3b23ed904498bf3396ff0593cb05_169)] [added: [129](#i04335d018da94076b0acf21e81ac886b_178)] | | |

| [Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)] [added: Contents](#i04335d018da94076b0acf21e81ac886b_7)] | | | [Item 8 [removed: Index](#i4b4e3b23ed904498bf3396ff0593cb05_82)] [added: Index](#i04335d018da94076b0acf21e81ac886b_94)] | | |

Based on this assessment, our management has concluded that our internal control over financial reporting was effective as of March 31, [removed: 2022.][added: 2023.]

Deloitte & Touche LLP, an independent registered public accounting firm, audited the financial statements included in this Annual Report on Form 10-K and has also audited the effectiveness of the Company’s internal control over financial reporting as of March 31, [removed: 2022.][added: 2023.]

We have audited the accompanying consolidated balance sheets of McKesson Corporation and subsidiaries (the “Company”) as of March 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of operations, comprehensive income (loss), stockholders’ [removed: equity,] [added: equity (deficit),] and cash flows, for each of the three years in the period ended March 31, [removed: 2022,] [added: 2023,] and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of March 31, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (“COSO”).][added: (COSO).]

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended March 31, [removed: 2022,] [added: 2023,] in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by COSO.

The Company and its affiliates are defendants in [removed: many] [added: numerous] cases asserting claims related to distribution of controlled substances, including opioids.

[removed: The Company is] [added: They have been] named as [removed: a defendant] [added: defendants] along with other pharmaceutical wholesale distributors, pharmaceutical [removed: manufacturers] [added: manufacturers,] and retail [removed: pharmacy chains.][added: pharmacies.]

[removed: The plaintiffs] [added: Plaintiffs] in these actions [removed: include] [added: have included] state attorneys general, county and municipal governments, [removed: hospitals,] tribal nations, [added: as well as private plaintiffs such as hospitals,] health and welfare funds, third-party [removed: payors] [added: payors,] and [removed: individuals.][added: individuals, as well as cases brought in Canada (“opioid litigation”).]

We identified [removed: the liabilities associated with] opioid [removed: claims brought by both Settling Governmental Entities, as well as U.S. governmental entities who are not party to the Settlement, collectively “Governmental Entities,”] [added: litigation] as a critical audit matter because of the significant judgment in auditing management’s accounting [added: and disclosure] for these matters.

Specifically, auditing management’s assessment of [removed: the magnitude of the liability and the determination of] whether [removed: there is] a [removed: reasonably estimable range of] loss in excess of the [removed: amount accrued,] [added: opioid litigation accrual] is [added: probable and reasonably estimable for unresolved cases is] subjective and requires significant judgment given the [removed: size] [added: novelty] and complexity of [added: the Company’s] opioid [removed: claims brought by Governmental Entities.][added: litigation.]

[removed: In addition, we] [added: - We] inspected responses to inquiry letters sent to both internal and external [removed: legal counsel as it relates to the terms of settlements with Governmental Entities.][added: counsel.]

- We examined Board of Directors meeting [removed: minutes, including relevant sub-committee meeting minutes, held inquiries with a director serving on the sub-committee,] [added: minutes] and compared to internal and external counsel’s written responses to our inquiry letters.

- We examined [removed: the] terms related to settlements [removed: with Governmental Entities.][added: of opioid claims.]

[removed: Uncertain Tax Position - Opioid Claims brought by Governmental Entities] [added: Opioid litigation and related uncertain tax position] - [removed: Refer] [added: refer] to Note [removed: 1] [added: 1, Note 6,] and Note [removed: 7] [added: 17] to the financial statements

The [removed: net] amount recognized [removed: by management] is measured as the largest amount of tax benefit that is greater than [removed: 50 percent] [added: 50%] likely of being [removed: realized.][added: realized upon effective settlement.]

| [Financial Notes](#i04335d018da94076b0acf21e81ac886b_118) | | | [70](#i04335d018da94076b0acf21e81ac886b_118) | | |

| [Note 9 - Leases](#i04335d018da94076b0acf21e81ac886b_148) | | | [98](#i04335d018da94076b0acf21e81ac886b_148) | | |

| [Note 13 - Pension Benefits](#i04335d018da94076b0acf21e81ac886b_160) | | | [106](#i04335d018da94076b0acf21e81ac886b_160) | | |

| [Note 14 - Hedging Activities](#i04335d018da94076b0acf21e81ac886b_163) | | | [113](#i04335d018da94076b0acf21e81ac886b_163) | | |

| [Note 18 - Stockholders' Equity (Deficit)](#i04335d018da94076b0acf21e81ac886b_175) | | | [126](#i04335d018da94076b0acf21e81ac886b_175) | | |

| [Note 20 - Segments of Business](#i04335d018da94076b0acf21e81ac886b_181) | | | [129](#i04335d018da94076b0acf21e81ac886b_181) | | |

May 8, 2023

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

The Company recognizes a liability for loss contingencies, including opioid litigation, when it is probable that a liability has been incurred and the amount of loss or range of loss is reasonably estimable.

The Company has recorded a $7.2 billion liability related to opioid litigation as of March 31, 2023.

In connection with this liability, the Company recognized a related income tax benefit, and has an unrecognized tax benefit resulting from uncertainty in the amount that is more likely than not to be deductible for U.S. federal and state income tax purposes.

There is also significant judgment associated with the Company’s disclosure of opioid litigation, including auditing management’s assertion that no range of loss can be estimated outside of the amount currently accrued.

In addition, auditing management’s estimate of the amount of related income tax benefit deemed more-likely-than-not of being realized is challenging because the evaluation of the technical merits of such tax positions requires significant judgment and an increased extent of effort, including the need to involve our tax specialists.

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

- We tested the effectiveness of the Company’s internal controls related to opioid litigation and the related uncertain tax position.

- We inquired of the Company’s internal and external legal counsel and tax experts, as well as executives and other members of management, to understand the basis for the Company’s accounting conclusions, including any changes in facts potentially impacting the Company’s reserves for uncertain tax positions.

- We evaluated management’s analysis of liabilities arising from opioid claims.

- With the assistance of our tax specialists, we evaluated management’s analysis of the uncertain tax position associated with the Company’s opioid litigation.

- We evaluated any events relevant to opioid litigation occurring subsequent to March 31, 2023.

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

| | | |

| May 8, 2023 | | |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

| | | | 2023 | | | | | | 2022 | | |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

| Share-based compensation | | | — | | | | | | — | | | | | | 161 | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 161 | | | | | | | | |

| Repurchase of common stock | | | — | | | | | | — | | | | | | 127 | | | | | | | | | | | | — | | | | | | — | | | | | | (11) | | | | | | (3,792) | | | | | | — | | | | | | (3,665) | | | | | | | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | 3,560 | | | | | | — | | | | | | — | | | | | | — | | | | | | 162 | | | | | | 3,722 | | | | | | | | |

| Formation of SCRI Oncology, LLC | | | — | | | | | | — | | | | | | 22 | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 225 | | | | | | 247 | | | | | | | | |

| Derecognition of noncontrolling interests in McKesson Europe AG | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (382) | | | | | | (382) | | | | | | | | |

| Balance, March 31, 2023 | | | 277 | | | | | | $ | 3 | | | | | $ | 7,747 | | | | | | | | | | | $ | 12,295 | | | | | $ | (905) | | | | | (141) | | | | | | $ | (20,997) | | | | | $ | 367 | | | | | $ | (1,490) | | | | | | | |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

| Net income (loss) | | | $ | 3,722 | | | | | $ | 1,287 | | | | | $ | (4,340) | |

| [Table of Contents](#i04335d018da94076b0acf21e81ac886b_7) | | | [Item 8 Index](#i04335d018da94076b0acf21e81ac886b_94) | | |

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “IR Act”).

Among other provisions, the IR Act includes a 15% corporate minimum tax, a 1% excise tax on certain repurchases of an entity’s own common stock after December 31, 2022, and various drug pricing reforms.

Based on its preliminary assessment, the Company does not currently expect the IR Act to have a material impact on its results of operations, financial position, or cash flows in the foreseeable future.

| [Note](#i4b4e3b23ed904498bf3396ff0593cb05_115) [2](#i4b4e3b23ed904498bf3396ff0593cb05_115) [- Held for Sale](#i4b4e3b23ed904498bf3396ff0593cb05_115) | | | [83](#i4b4e3b23ed904498bf3396ff0593cb05_115) | | |

| [Note 1](#i4b4e3b23ed904498bf3396ff0593cb05_139)[0](#i4b4e3b23ed904498bf3396ff0593cb05_139) [- Leases](#i4b4e3b23ed904498bf3396ff0593cb05_139) | | | [101](#i4b4e3b23ed904498bf3396ff0593cb05_139) | | |

| [Note 1](#i4b4e3b23ed904498bf3396ff0593cb05_151)[4](#i4b4e3b23ed904498bf3396ff0593cb05_151) [- Pension Benefits](#i4b4e3b23ed904498bf3396ff0593cb05_151) | | | [109](#i4b4e3b23ed904498bf3396ff0593cb05_151) | | |

| [Note 1](#i4b4e3b23ed904498bf3396ff0593cb05_154)[5](#i4b4e3b23ed904498bf3396ff0593cb05_154) [- Hedging Activities](#i4b4e3b23ed904498bf3396ff0593cb05_154) | | | [116](#i4b4e3b23ed904498bf3396ff0593cb05_154) | | |

| [Note](#i4b4e3b23ed904498bf3396ff0593cb05_166) [19](#i4b4e3b23ed904498bf3396ff0593cb05_166) [- Stockholders' Equit](#i4b4e3b23ed904498bf3396ff0593cb05_166)[y](#i4b4e3b23ed904498bf3396ff0593cb05_166) [(Deficit)](#i4b4e3b23ed904498bf3396ff0593cb05_166) | | | [129](#i4b4e3b23ed904498bf3396ff0593cb05_166) | | |

| [Note 2](#i4b4e3b23ed904498bf3396ff0593cb05_172)[1](#i4b4e3b23ed904498bf3396ff0593cb05_172) [- Segments of Business](#i4b4e3b23ed904498bf3396ff0593cb05_172) | | | [132](#i4b4e3b23ed904498bf3396ff0593cb05_172) | | |

May 9, 2022

Contingent Liabilities - Opioid Claims brought by United States (U.S.) Governmental Entities - Refer to Note 1 and Note 18 to the financial statements

*Critical Audit Matter Description*

On February 25, 2022, the Company and two other United States pharmaceutical distribution companies (collectively, "Distributors") determined that there is sufficient State and subdivision participation to proceed with an agreement ("Settlement") to settle a substantial majority of opioid-related lawsuits filed against the Distributors by U.S. states, territories and local governmental entities (collectively, "Settling Governmental Entities").

The Settlement became effective on April 2, 2022.

If all conditions to the Settlement are satisfied, the Distributors would pay the Settling Governmental Entities up to approximately $19.5 billion over 18 years, with up to approximately $7.4 billion to be paid by the Company for its 38.1% portion.

Although the Settlement terminated the substantial majority of opioid-related suits pending against the Company, a small number of subdivisions in participating states have opted not to participate in the Settlement, and those suits remain pending.

The Company continues to prepare for trial in these pending matters, and believes that it has valid defenses to the claims pending against it, and it intends to vigorously defend against all such claims if acceptable settlement terms are not achieved.

When a loss is considered probable and reasonably estimable, the Company records a liability in the amount of its estimate for the ultimate loss.

The Company reviews all loss contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made.

The Company also performs an assessment of loss contingencies where a loss is reasonably possible.

If it is reasonably possible that a loss may have been incurred and the effect on the financial statements could be material, the Company discloses the nature of the loss contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the financial statements.

For the year ended March 31, 2022, management believes that a loss from opioid claims is both probable and reasonably estimable, and accordingly, an $8.3 billion liability has been recorded by management, inclusive of claims brought by U.S. governmental entities, which represents the Company’s best estimate of future loss related to opioid litigation.

*How the Critical Audit Matter Was Addressed in the Audit*

- We tested the effectiveness of internal controls related to liabilities arising from opioid claims brought by Governmental Entities, and approval of the accounting treatment and related disclosures.

- We inquired of the Company’s internal and external legal counsel, as well as executives and other members of management, to understand the basis for the Company’s conclusion that a loss related to opioid claims brought by Governmental Entities is probable and reasonably estimable, and that it is not possible to estimate a range of loss in excess of the amount accrued as of March 31, 2022.

We also made inquiries of legal counsel regarding the status of discussions and legal proceedings with Governmental Entities who are not currently party to the Settlement.

- We evaluated management’s analysis of liabilities arising from opioid claims brought by Governmental Entities, including the methodology used by management to determine the probability of such loss and conclusion that it is not possible to estimate a range of loss in excess of the amount accrued as of March 31, 2022.

We also evaluated the methodology used by management to estimate the most likely loss to be incurred by the Company as a result of these specific opioid claims.

- With the assistance of our specialists in accounting for loss contingencies, we evaluated the facts, evidence and the Company’s related accounting treatment for liabilities arising from opioid claims brought by Governmental Entities.

- We evaluated any events subsequent to March 31, 2022 that might impact management’s accounting treatment.

- We obtained written representations from executives and internal counsel of the Company.

- We evaluated the adequacy of the Company’s related disclosures for consistency with our testing.

The Company has recorded charges and related tax benefit for opioid-related claims, inclusive of those brought by Governmental Entities.

In order to account for the uncertainty associated with the ultimate realization of the tax benefit related to opioid claims, the Company recorded an uncertain tax position reserve.

Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

The Company uses significant judgment in evaluating the technical tax merits of income tax benefits that qualify for recognition, including the determination of the amount that is more likely than not of being realized for U.S. federal and state income tax purposes.

We identified the Company’s uncertain tax position related to liabilities arising from opioid claims brought by Governmental Entities as a critical audit matter because of the challenges in auditing management’s estimate of the amount of income tax benefit that qualifies for recognition.

Specifically, there is significant judgment associated with the assessment of the technical tax merits of such a settlement, including the related interpretation of applicable, newly-enacted tax laws and regulations.

Auditing the uncertain tax position related to liabilities arising from opioid claims brought by Governmental Entities required a high degree of auditor judgment and an increased extent of effort, including the need to involve our tax specialists.

Our audit procedures related to the Company's uncertain tax position associated with liabilities arising from opioid claims brought by Governmental Entities included the following, among others:

- We tested the effectiveness of internal controls related to the Company’s assessment of the technical merits of its tax position, including the Company’s assessment as to the amount of benefit that is more likely than not to be realized upon settlement with a taxing authority that has full knowledge of all relevant information.

- With the assistance of our tax specialists, we evaluated the facts, evidence and the Company’s related income tax analysis for liabilities arising from opioid claims brought by Governmental Entities, including assumptions used by management to measure the related recognized and unrecognized tax benefits.

- We inquired of the Company’s internal and external legal counsel to understand the basis for the Company’s conclusion that a portion of the liabilities arising from opioid claims brought by Governmental Entities would be deductible based on the settlement terms, and expected documentation to be received from Governmental Entities regarding how settlement funds are used.

Management’s report on the Company’s internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and the related report of our independent registered public accounting firm are included in this Annual Report, under the headings, “Management’s Annual Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting [removed: Firm”] [added: Firm,”] and are incorporated herein by reference.

There was no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our fourth quarter of [removed: 2022] [added: fiscal 2023] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Information about our [removed: Directors is incorporated by reference from the discussion under Item 1 of our Proxy Statement for the 2022 Annual Meeting of Shareholders (the “Proxy Statement”) under the heading “Election of Directors.” Information about our Executive Officers] [added: executive officers] is incorporated by reference from the discussion in Part I of this [removed: report] [added: Annual Report] under the heading “Information about our Executive Officers.” Information about our Audit Committee, including the members of the committee and our Audit Committee Financial Experts, is incorporated by reference from the discussion in Item 1 of [removed: our] [added: the] Proxy Statement under the heading “The Board, Committees and Meetings,” and in Item 2 of [removed: our] [added: the] Proxy Statement under the heading “Audit Committee Report.”

Information about the Code of Conduct applicable to all employees, officers, and directors can be found on our website, www.mckesson.com, under the caption “Investors [removed: -] [added: —] Governance.” The Company’s Corporate Governance Guidelines and Charters for the Audit, [removed: Compensation,] [added: Compensation] and [added: Talent, Compliance, Finance, as well as the] Governance [added: and Sustainability] Committees can also be found on our website under the same caption.

[Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7)]

Information about our directors is incorporated by reference from the discussion under the heading “Election of Directors” under Item 1 of our Proxy Statement for the calendar year 2023 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days of the Company’s fiscal year end covered by this Annual Report (the “Proxy Statement”).

Information [removed: with respect to this item] [added: about executive compensation] is incorporated by reference from the discussion under the heading “Executive Compensation” in [removed: our] [added: the] Proxy Statement.

Information about security ownership of certain beneficial owners and management is incorporated by reference from the discussion under the heading “Principal Shareholders” in [removed: our] [added: the] Proxy Statement.

The following table sets forth information as of March 31, [removed: 2022] [added: 2023] with respect to the plans under which the Company’s common stock is authorized for issuance:

| *Plan Category (In millions, except per share amounts)* | | | Number of securities to be issued upon exercise of outstanding options, [removed: warrants] [added: warrants,] and rights | | | | | | Weighted-average exercise price of outstanding options, [removed: warrants] [added: warrants,] and rights (1) | | | | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) | | |

| Equity compensation plans approved by security holders | | | [removed: 3.0] [added: 4.7] (2) | | | | | | $ | [removed: 175.23] [added: 154.36] | | | | | [removed: 20.4] [added: 8.6] (3) | | |

(1)The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit [removed: (“RSU”)] awards, since recipients are not required to pay an exercise price to receive the shares subject to these awards.

(2)Represents option and [removed: RSU] [added: restricted stock unit] awards outstanding under the following plans: (i) 1997 Non-Employee Directors’ Equity Compensation and Deferral Plan; (ii) the 2005 Stock Plan; [removed: and] (iii) the 2013 Stock [added: Plan; and (iv) the 2022 Stock] Plan.

(3)Represents [removed: 1.9] [added: 3.7] million shares available for purchase under the 2000 Employee Stock Purchase Plan and [removed: 18.5] [added: 4.9] million shares available for grant under the [removed: 2013] [added: 2022] Stock Plan.

The plans are administered by the Compensation [added: and Talent] Committee of the Board of Directors, except for the portion of the [added: 2022 Stock Plan,] 2013 Stock [removed: Plan] [added: Plan,] and 2005 Stock Plan related to non-employee directors, which is administered by the Board of Directors or its Governance [added: and Sustainability] Committee.

The 2013 Stock Plan [removed: permits] [added: permitted] the grant of awards in the form of stock options, stock appreciation rights, [removed: restricted stock (“RS”), restricted stock units (“RSUs”),] [added: RS, RSUs,] performance-based restricted stock units (“PeRSUs”), performance shares, and other share-based awards.

The number of shares reserved for issuance under the 2013 Stock Plan [removed: equals] [added: was equal to] the sum of (i) 30.0 million shares, (ii) the number of shares reserved but unissued under the 2005 Stock Plan as of the effective date of the 2013 Stock Plan, and (iii) the number of shares that [removed: become] [added: became] available for reuse under the 2005 Stock Plan following the effective date of the 2013 Stock Plan.

[removed: For] [added: Pursuant to the 2013 Stock Plan, for] any one share of common stock issued in connection with an RS, RSU, performance share, or other full-share award, three and one-half shares [removed: shall be] [added: were] deducted from the shares available for future grants.

Shares of common stock not issued or delivered as a result of the net exercise of a stock option, including in respect of the payment of applicable taxes, or shares repurchased on the open market with proceeds from the exercise of options shall not be returned to the reserve of shares available for issuance under the [removed: 2013] [added: 2022] Stock Plan.

Shares withheld to satisfy tax obligations relating to the vesting of a full-share award shall be returned to the reserve of shares available for issuance under the [removed: 2013] [added: 2022] Stock Plan.

[Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7)]

[added: Under the terms of the 2022] Stock [added: Plan and 2013 Stock Plan, the exercise price of stock] options [removed: are granted at] [added: is] no less than fair market value [added: on the grant date,] and [removed: those] options [removed: granted under the 2013 Stock Plan] generally have a contractual term of seven years.

The vesting of RS or RSUs is determined by the Compensation [added: and Talent] Committee at the time of grant.

[removed: Beginning with awards granted in fiscal year 2021,] [added: Awards of] RS and RSUs generally vest over three years.

The Company’s executive officers and other members of senior management are annually granted [removed: performance awards called performance stock units (“PSUs”),] [added: PSUs,] which have a three-year performance period and are payable in shares without an additional vesting period.

Non-employee directors may be granted an award on the date of each annual meeting of [removed: the] stockholders for up to 5,000 RSUs, as determined by the Board of Directors.

[removed: For] [added: Pursuant to the 2005 Stock Plan, for] any one share of common stock issued in connection with an RS, RSU, performance share, or other full-share award, two shares shall be deducted from the shares available for future grants.

Shares reserved but unissued under the 2005 Stock Plan as of the effective date of the 2013 Stock Plan, and shares that [removed: become] [added: became] available for reuse under the 2005 Stock Plan following the effectiveness of the 2013 Stock Plan, [removed: will be] [added: were] available for awards under the 2013 Stock Plan.

Currently, [removed: 21.1] [added: 23.1] million shares have been approved by stockholders for issuance under the ESPP.

This amount also includes 2.9 million shares reserved for the potential of maximum payouts of outstanding performance stock units previously granted under the 2013 Stock Plan.

*2022 Stock Plan:* The 2022 Stock Plan was adopted by the Board of Directors on April 27, 2022 and approved by the Company’s stockholders on July 22, 2022.

The 2022 Stock Plan permits the grant of awards in the form of stock options, stock appreciation rights, restricted stock (“RS”), restricted stock units (“RSUs”), performance awards (including performance stock units (“PSUs”)), and other share-based awards.

The Company has reserved approximately 5.0 million shares for issuance under the 2022 Stock Plan.

Shares of common stock not issued or delivered as a result of the net exercise of a stock option, including in respect of the payment of applicable taxes, or shares repurchased on the open market with proceeds from the exercise of options were not returned to the reserve of shares available for issuance under the 2013 Stock Plan.

Shares withheld to satisfy tax obligations relating to the vesting of a full-share award were returned to the reserve of shares available for issuance under the 2013 Stock Plan.

The shares previously reserved under the 2013 Stock Plan are no longer available for issuance in connection with the adoption of the 2022 Stock Plan.

[Table of Contents](#i04335d018da94076b0acf21e81ac886b_7)

RSUs granted under the PeRSU program vest three years following the end of the performance period.

Information with respect to certain transactions with directors and management is incorporated by reference from the Proxy Statement under the heading “Related Party Transactions Policy and Transactions with Related Persons.” Information regarding Director independence is incorporated by reference from the Proxy Statement under the heading “Director Independence.” Additional information regarding certain related party balances and transactions is included in the [removed: Financial Review] [added: “Financial Review"] section of this Annual Report and Financial Note [removed: 20,] [added: 19,] “Related Party Balances and Transactions” to the consolidated financial statements included in this Annual Report.

Information regarding principal accountant fees and services is set forth under the heading “Ratification of Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year [removed: 2023”] [added: 2024”] in [removed: our] [added: the] Proxy Statement [removed: and all such information] is incorporated herein by reference.

[Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7)]

| [Report of Deloitte & Touche LLP, Independent Registered Public Accounting [removed: Fir](#i4b4e3b23ed904498bf3396ff0593cb05_88)[m](#i4b4e3b23ed904498bf3396ff0593cb05_88)] [added: Firm](#i04335d018da94076b0acf21e81ac886b_100)] (PCAOB ID: 34) | | | [removed: [65](#i4b4e3b23ed904498bf3396ff0593cb05_88)] [added: [61](#i04335d018da94076b0acf21e81ac886b_100)] | | |

| [Consolidated Statements of Operations for the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_91)[2](#i4b4e3b23ed904498bf3396ff0593cb05_91)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_91)[1](#i4b4e3b23ed904498bf3396ff0593cb05_91)[,] [added: 2023, 2022,] and [removed: 20](#i4b4e3b23ed904498bf3396ff0593cb05_91)[20](#i4b4e3b23ed904498bf3396ff0593cb05_91)] [added: 2021](#i04335d018da94076b0acf21e81ac886b_103)] | | | [removed: [70](#i4b4e3b23ed904498bf3396ff0593cb05_91)] [added: [65](#i04335d018da94076b0acf21e81ac886b_103)] | | |

| [Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_94)[2](#i4b4e3b23ed904498bf3396ff0593cb05_94)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_94)[1](#i4b4e3b23ed904498bf3396ff0593cb05_94)[,] [added: 2023, 2022,] and [removed: 20](#i4b4e3b23ed904498bf3396ff0593cb05_94)[20](#i4b4e3b23ed904498bf3396ff0593cb05_94)] [added: 2021](#i04335d018da94076b0acf21e81ac886b_106)] | | | [removed: [71](#i4b4e3b23ed904498bf3396ff0593cb05_94)] [added: [66](#i04335d018da94076b0acf21e81ac886b_106)] | | |

| [Consolidated Balance Sheets as of March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_97)[2](#i4b4e3b23ed904498bf3396ff0593cb05_97) [and 202](#i4b4e3b23ed904498bf3396ff0593cb05_97)[1](#i4b4e3b23ed904498bf3396ff0593cb05_97)] [added: 2023 and 2022](#i04335d018da94076b0acf21e81ac886b_109)] | | | [removed: [72](#i4b4e3b23ed904498bf3396ff0593cb05_97)] [added: [67](#i04335d018da94076b0acf21e81ac886b_109)] | | |

| [Consolidated Statements of Stockholders’ [removed: Equity](#i4b4e3b23ed904498bf3396ff0593cb05_100) [(](#i4b4e3b23ed904498bf3396ff0593cb05_100)[D](#i4b4e3b23ed904498bf3396ff0593cb05_100)[e](#i4b4e3b23ed904498bf3396ff0593cb05_100)[ficit)](#i4b4e3b23ed904498bf3396ff0593cb05_100) [for] [added: Equity (Deficit) for] the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_100)[2](#i4b4e3b23ed904498bf3396ff0593cb05_100)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_100)[1](#i4b4e3b23ed904498bf3396ff0593cb05_100)[,] [added: 2023, 2022,] and [removed: 20](#i4b4e3b23ed904498bf3396ff0593cb05_100)[20](#i4b4e3b23ed904498bf3396ff0593cb05_100)] [added: 2021](#i04335d018da94076b0acf21e81ac886b_112)] | | | [removed: [73](#i4b4e3b23ed904498bf3396ff0593cb05_100)] [added: [68](#i04335d018da94076b0acf21e81ac886b_112)] | | |

| [Consolidated Statements of Cash Flows for the years ended March 31, [removed: 202](#i4b4e3b23ed904498bf3396ff0593cb05_103)[2](#i4b4e3b23ed904498bf3396ff0593cb05_103)[, 202](#i4b4e3b23ed904498bf3396ff0593cb05_103)[1](#i4b4e3b23ed904498bf3396ff0593cb05_103)[,] [added: 2023, 2022,] and [removed: 20](#i4b4e3b23ed904498bf3396ff0593cb05_103)[20](#i4b4e3b23ed904498bf3396ff0593cb05_103)] [added: 2021](#i04335d018da94076b0acf21e81ac886b_115)] | | | [removed: [74](#i4b4e3b23ed904498bf3396ff0593cb05_103)] [added: [69](#i04335d018da94076b0acf21e81ac886b_115)] | | |

| [Schedule II-Valuation and Qualifying [removed: Accounts](#i4b4e3b23ed904498bf3396ff0593cb05_211)] [added: Accounts](#i04335d018da94076b0acf21e81ac886b_220)] | | | [removed: [142](#i4b4e3b23ed904498bf3396ff0593cb05_211)] [added: [139](#i04335d018da94076b0acf21e81ac886b_220)] | | |

| [(a)(3) Exhibits submitted with this Annual Report on Form 10-K as filed with the SEC and those incorporated by reference to other filings are listed on the Exhibit [removed: Index](#i4b4e3b23ed904498bf3396ff0593cb05_214)] [added: Index](#i04335d018da94076b0acf21e81ac886b_223)] | | | [removed: [143](#i4b4e3b23ed904498bf3396ff0593cb05_214)] [added: [140](#i04335d018da94076b0acf21e81ac886b_223)] | | |

[Table of [removed: Contents](#i4b4e3b23ed904498bf3396ff0593cb05_7)][added: Contents](#i04335d018da94076b0acf21e81ac886b_7)]

| Year Ended March 31, [removed: 2020] [added: 2023] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Allowances for credit losses | | | $ | [removed: 273] [added: 99] | | | | | $ | [removed: 91] [added: 45] | | | | | $ | [removed: (19)] [added: 5] | | | | | $ | [removed: (93)] [added: (35)] | | | | | $ | [removed: 252] [added: 114] | |

| Other allowances | | | [removed: 24] [added: 52] | | | | | | — | | | | | | [removed: —] [added: 4] | | | | | | [removed: 6] [added: (10)] | | | | | | [removed: 30] [added: 46] | | |

| | | | | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| | | | Written-off | | | | | | $ | [removed: (106)] [added: (37)] | | | | | $ | [removed: (40)] [added: (106)] | | | | | $ | [removed: (93)] [added: (40)] | |

| | | | Credited to other accounts and other | | | | | | [removed: (2)] [added: (8)] | | | | | | [removed: (6)] [added: (2)] | | | | | | [removed: 6] [added: (6)] | | |

| | | | Total | | | | | | $ | [removed: (108)] [added: (45)] | | | | | $ | [removed: (46)] [added: (108)] | | | | | $ | [removed: (87)] [added: (46)] | |

| (2) | | | Amounts shown as deductions from current and non-current receivables (current allowances were [removed: $144] [added: $158] million, [removed: $250] [added: $144] million, and [removed: $265] [added: $250] million at March 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020,] [added: 2021,] respectively) | | | | | | $ | [removed: 151] [added: 160] | | | | | $ | [removed: 261] [added: 151] | | | | | $ | [removed: 282] [added: 261] | |

| [removed: 2.1] [added: 10.17] | | | [removed: [Agreement of Contribution and Sale, dated as of June 28, 2016,] [added: [Tax Matters Agreement,] by and [removed: among] [added: between] McKesson Corporation, PF2 [removed: NewCo LLC, PF2 NewCo Intermediate Holdings, LLC, PF2 NewCo Holdings, LLC, HCIT Holdings,] [added: SpinCo,] Inc., Change [removed: Healthcare,] [added: Healthcare] Inc., Change [removed: Aggregator L.P.] [added: Healthcare LLC] and [removed: H&F Echo] [added: Change Healthcare] Holdings, [removed: L.P.](http://www.sec.gov/Archives/edgar/data/927653/000119312516641582/d221363dex21.htm)] [added: LLC dated as of March 9, 2020](http://www.sec.gov/Archives/edgar/data/927653/000119312520072880/d846210dex101.htm)] | | | 8-K | | | 1-13252 | | | [removed: 2.1] [added: 10.1] | | | [removed: July 5, 2016] [added: March 13, 2020] | | |

| 3.2 | | | [Amended and Restated By-Laws of the Company, as [removed: amended March 11, 2020](http://www.sec.gov/Archives/edgar/data/927653/000092765320000021/amendedandrestatedby-l.htm)] [added: amended](https://www.sec.gov/Archives/edgar/data/927653/000092765323000023/mckessoncorpby-laws2023.htm) [](https://www.sec.gov/Archives/edgar/data/927653/000092765323000023/mckessoncorpby-laws2023.htm)[April 26](https://www.sec.gov/Archives/edgar/data/927653/000092765323000023/mckessoncorpby-laws2023.htm)[, 202](https://www.sec.gov/Archives/edgar/data/927653/000092765323000023/mckessoncorpby-laws2023.htm)[3](https://www.sec.gov/Archives/edgar/data/927653/000092765323000023/mckessoncorpby-laws2023.htm)] | | | 8-K | | | 1-13252 | | | 3.1 | | | [removed: March 13, 2020] [added: April 28, 2023] | | |

| 4.6 | | | [Officers’ Certificate, dated as of [removed: December 4, 2012,] [added: March 10, 2014,] and related Form of [removed: 2022 Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312512490067/d447856dex42.htm)] [added: 2024 Note, and Form of 2044 Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312514090428/d690531dex42.htm)] | | | 8-K | | | 1-13252 | | | 4.2 | | | [removed: December 4, 2012] [added: March 10, 2014] | | |

| [removed: 4.7] [added: 4.14] | | | [removed: [Officers’] [added: [Officer’s] Certificate, dated as of [removed: March 8, 2013,] [added: February 15, 2023,] and related Form of [removed: 2023 Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312513097422/d498651dex42.htm)] [added: 2026 Note.](https://www.sec.gov/Archives/edgar/data/927653/000119312523040194/d419477dex42.htm)] | | | 8-K | | | 1-13252 | | | 4.2 | | | [removed: March 8, 2013] [added: February 15, 2023] | | |

| 4.8 | | | [removed: [Officers’] [added: [Officer’s] Certificate, dated as of [removed: March 10, 2014,] [added: February 12, 2018,] and related Form of [removed: 2024 Note, and Form of 2044 Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312514090428/d690531dex42.htm)] [added: 2026 Euro Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312518040775/d730912dex41.htm)] | | | 8-K | | | 1-13252 | | | [removed: 4.2] [added: 4.1] | | | [removed: March 10, 2014] [added: February 13, 2018] | | |

| [removed: 4.9] [added: 4.7] | | | [Officer’s Certificate, dated as of February 17, 2017, and related Form of 2021 Euro Note, Form of 2025 Euro Note, and Form of 2029 Sterling Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312517047290/d347385dex41.htm) | | | 8-K | | | 1-13252 | | | 4.1 | | | February 17, 2017 | | |

| [removed: 4.10] [added: 4.9] | | | [Officer’s Certificate, dated as of February [removed: 12,] [added: 16,] 2018, and related Form of [removed: 2026 Euro Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312518040775/d730912dex41.htm)] [added: 2028 Note.](http://www.sec.gov/Archives/edgar/data/927653/000119312518051049/d507348dex41.htm)] | | | 8-K | | | 1-13252 | | | 4.1 | | | February [removed: 13,] [added: 21,] 2018 | | |