Equity method investments

12 Months Ended

Aug. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity method investments as of August 31, 2021 and 2020 were as follows (in millions, except percentages):


	2021			2020
	Carrying value		Ownership percentage	Carrying value		Ownership percentage
AmerisourceBergen	$	4,407	28%	$	5,446	28%
Others	2,580		8% - 50%	1,758		8% - 50%
Total	$	6,987		$	7,204

AmerisourceBergen Corporation (“AmerisourceBergen”) investment

As of August 31, 2021 and August 31, 2020, respectively, the Company owned 58,854,867 and 56,854,867 shares of AmerisourceBergen common stock, representing approximately 28.5% and 27.9% of its outstanding common stock based on the share count publicly reported by AmerisourceBergen in its most recent Quarterly Report on Form 10-Q. As of August 31, 2021, the Company has designated one member of AmerisourceBergen’s board of directors. 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 United States 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 Statements of Earnings. During the twelve months ended August 31, 2021, the Company recognized equity losses in AmerisourceBergen of $1,139 million. These equity losses were primarily due to AmerisourceBergen's recognition of $5.6 billion, net of tax charge 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 August 31, 2021 and 2020 was $7.2 billion and $5.5 billion, respectively. As of August 31, 2021, the carrying value of Company’s investment in AmerisourceBergen 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 the U.S. which include the Company's investment in HC Group Holdings I, LLC (“HC Group Holdings”) which owns equity interest in Option Care Health, Village Practice Management Company, LLC (“VillageMD”), BrightSpring Health Services (previously PharMerica Corporation) and Shields Health Solutions and the Company's investments in China through Sinopharm Medicine Holding Guoda Drugstores Co., Ltd, Guangzhou Pharmaceuticals Corporation and Nanjing Pharmaceutical Company Limited.

The Company reported $627 million, $31 million and $8 million of post-tax equity earnings from other equity method investments, for the fiscal years ended August 31, 2021, 2020 and 2019, respectively.

During the fiscal year ended August 31, 2021, the Company recorded a gain of $290 million in Other income due to a partial sale of ownership interest in Option Care Health by the Company's equity method investee HC Group Holdings. During the fiscal year ended August 31, 2021, as a result of partial sales of ownership interest in Option Care Health, our equity method investee HC Group Holdings lost the ability to control Option Care Health and, therefore, deconsolidated Option Care Health in its financial statements. As a result of this deconsolidation, HC Group Holdings recognized a gain of $1.2 billion and the Company recorded its share of equity earnings in HC Group Holdings $576 million during the fiscal year ended August 31, 2021, respectively, in post tax earnings from other equity method investments.

During the fiscal year ended August 31, 2021, the Company made an additional investment of $750 million in VillageMD, $250 million of which is recorded as an equity method investment and $500 million of which is recorded as an investment in convertible debt securities within Other non-current assets. See Note 21. Subsequent events, to the Consolidated Financial Statements included in Part II. Item 8 herein for further information.

Summarized financial information

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

Balance sheet (in millions)


	Year ended August 31,
	2021		2020
Current assets	$	49,538	$	39,167
Non-current assets	27,442		18,138
Current liabilities	48,766		38,034
Non-current liabilities	22,046		10,600
Shareholders’ equity1	6,168		8,671

1Shareholders’ equity at August 31, 2021 and 2020 includes $646 million and $387 million, respectively, related to noncontrolling interests.

Statements of earnings (in millions)


	Year ended August 31,
	2021		2020		2019
Sales	$	232,719	$	208,625	$	195,540
Gross profit	10,889		8,707		7,303
Net earnings (loss)	(3,475)		1,624		997
Share of earnings (loss) from equity method investments	(512)		372		172

The summarized financial information for equity method investments has been included on an aggregated basis for all investments as reported at the end of each fiscal year end.