Equity method investments

3 Months Ended

Nov. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Equity method investments as of November 30, 2020 and August 31, 2020, were as follows (in millions, except percentages):


	November 30, 2020			August 31, 2020
	Carrying value		Ownership percentage	Carrying value		Ownership percentage
AmerisourceBergen	$	4,030	28%	$	5,446	28%
Others	1,989		8% - 50%	1,892		8% - 50%
Total	$	6,019		$	7,338

AmerisourceBergen Corporation (“AmerisourceBergen”) investment

As of November 30, 2020 and August 31, 2020, the Company owned 56,854,867 AmerisourceBergen common shares, representing approximately 28% of its outstanding common stock, based on the most recent share count publicly reported by AmerisourceBergen. The Company accounts for its equity investment in AmerisourceBergen using the equity method of accounting, with the net earnings (loss) 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 (loss) from AmerisourceBergen are reported as a separate line in the Consolidated Condensed Statements of Earnings. The Company recognized equity losses in AmerisourceBergen of $1,373 million during the three months ended November 30, 2020. These equity losses are primarily due to AmerisourceBergen recognition of $5.6 billion, net of tax, charges related to its ongoing opioid litigation in its financial statements for the three months period ended September 30, 2020.

The Level 1 fair market value of the Company’s equity investment in AmerisourceBergen common stock at November 30, 2020 was $5.9 billion. As of November 30, 2020, the Company’s investment in AmerisourceBergen carrying value exceeded its

proportionate share of the net assets of AmerisourceBergen by $4.3 billion. This premium of $4.3 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 (“Guangzhou Pharmaceuticals”) and Nanjing Pharmaceutical Company Limited, the Company’s pharmaceutical wholesale investments in China; its investment in Sinopharm Medicine Holding Guoda Drugstores Co., Ltd., the Company's retail pharmacy investment in China, the Company's investment in VillageMD, PharMerica Corporation, Shields Health Solutions and BioScrip (resulting from its merger with Option Care Inc.) in the U.S..

The Company reported $23 million of post-tax equity earnings and $9 million of post-tax equity losses from other equity method investments, including equity method investments classified as operating, for the three months ended November 30, 2020 and November 30, 2019, respectively.

Summarized financial information

Summarized financial information for the Company’s equity method investments in aggregate is as follows:

Statements of earnings (loss) (in millions)


	Three months ended November 30,
	2020		2019
Sales	$	56,548	$	51,581
Gross profit	2,472		7,733
Net earnings (loss)	(4,798)		1,528
Share of earnings (loss) from equity method investments	(1,350)		4

The summarized financial information for equity method investments has been included on an aggregated basis for all investments as reported for the three months ended November 30, 2020 and November 30, 2019, respectively.