Equity method investments

9 Months Ended

May 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

Equity method investments as of May 31, 2017 and August 31, 2016, are as follows (in millions, except percentages):



	May 31, 2017			August 31, 2016
	Carrying value		Ownership percentage	Carrying value		Ownership percentage
AmerisourceBergen	$	5,051	26%	$	4,964	24%
Others	1,272		8% - 50%	1,210		12% - 50%
Total	$	6,323		$	6,174

AmerisourceBergen investment

As of May 31, 2017 and August 31, 2016, the Company owned 56,854,867 AmerisourceBergen Corporation (“AmerisourceBergen”) common shares, representing approximately 26% and 24% of the outstanding AmerisourceBergen common stock, respectively. The Company accounts for its equity investment in AmerisourceBergen using the equity method of accounting, with the net earnings attributable to the Company’s investment being classified within the operating income of its Pharmaceutical Wholesale segment. Due to the timing and availability of financial information of AmerisourceBergen, the Company accounts for this equity method investment on a financial reporting lag of two months. Equity earnings from AmerisourceBergen is reported as a separate line in the Consolidated Condensed Statements of Earnings. The level 1 fair market value of the Company’s equity investment in AmerisourceBergen common stock at May 31, 2017 is $5.2 billion.

The Company’s investment in AmerisourceBergen carrying value exceeded its proportionate share of the net assets of AmerisourceBergen by $4.4 billion. This premium of $4.4 billion was recognized as part of the carrying value in the Company’s equity investment in AmerisourceBergen. The difference was primarily related to goodwill and the fair value of AmerisourceBergen intangible assets.

Other investments

The Company’s other equity method investments include its investments in Guangzhou Pharmaceuticals Corporation and Nanjing Pharmaceutical Corporation Limited, the Company’s pharmaceutical wholesale investments in China; and the equity method investment retained through the sale of a majority interest in Option Care Inc. in fiscal 2015. The Company reported $21 million of post-tax equity losses and $15 million of post-tax equity earnings from equity method investments other than AmerisourceBergen for the three months ended May 31, 2017 and May 31, 2016, respectively. The Company reported $7 million of post-tax equity earnings and $35 million of post-tax equity earnings from equity method investments other than AmerisourceBergen for the nine months ended May 31, 2017 and May 31, 2016, respectively.