Equity method investments

6 Months Ended

Feb. 29, 2024

Equity Method Investments and Joint Ventures [Abstract]

Equity method investments were as follows (in millions, except percentages):


	February 29, 2024			August 31, 2023
	Carrying value		Ownership percentage	Carrying value		Ownership percentage
Cencora	$	2,183	14%	$	2,534	16%
Others	1,073		8% - 50%	963		8% - 50%
Total	$	3,256		$	3,497

Cencora investment

As of February 29, 2024 and August 31, 2023, the Company owned 26.3 million and 31.8 million shares of Cencora, Inc. (“Cencora”) common stock, respectively, representing approximately 13.5% and 15.9% of its outstanding common stock based on the share count publicly reported by Cencora in its most recent filings with the SEC.

During the three months ended February 29, 2024 and February 28, 2023, the Company sold shares of Cencora common stock for total consideration of approximately $992 million and $984 million, respectively. These transactions resulted in the Company recording pre-tax gains of $619 million and $492 million, respectively, in Other income (expense), net within the Consolidated Condensed Statements of Earnings, including $20 million and $40 million of losses, respectively, reclassified from within Accumulated other comprehensive loss in the Consolidated Condensed Balance Sheets.

During the six months ended February 29, 2024 and February 28, 2023, the Company sold shares of Cencora common stock for total consideration of approximately $1.2 billion and $3.0 billion, respectively. These transactions resulted in the Company recording pre-tax gains of $758 million and $1.5 billion, respectively, in Other income (expense), net within the Consolidated Condensed Statements of Earnings, including $28 million and $150 million of losses, respectively, reclassified from within Accumulated other comprehensive loss in the Consolidated Condensed Balance Sheets.

As of February 29, 2024 and August 31, 2023, the Company has pledged 20.0 million and 17.3 million shares of Cencora common stock, respectively, as collateral upon entering into variable prepaid forward (“VPF”) transactions. See Note 8. Financial instruments for further information.

The Company accounts for its equity investment in Cencora using the equity method of accounting, with the net earnings attributable to the Company’s investment being classified within the operating income of its U.S. Retail Pharmacy segment. Due to the timing and availability of financial information of Cencora, the Company accounts for this equity method investment on a financial reporting lag of two months. Equity earnings from Cencora are reported as a separate line item in the Consolidated Condensed Statements of Earnings.

The Level 1 fair market value of the Company’s equity investment in Cencora common stock at February 29, 2024 and August 31, 2023 was $6.2 billion and $5.6 billion, respectively. As of February 29, 2024 the carrying value of the Company’s investment in Cencora exceeded its proportionate share of the net assets of Cencora by $2.1 billion. This premium of $2.1 billion was recognized as part of the carrying value in the Company’s equity investment in Cencora. The difference is primarily related to goodwill and the fair value of Cencora intangible assets.

Other investments

At February 29, 2024, the Company’s other equity method investments primarily include its U.S. investment in BrightSpring Health Services, and the Company’s investments in China in Sinopharm Medicine Holding Guoda Drugstores Co., Ltd and Nanjing Pharmaceutical Company Limited. On June 8, 2023 and December 15, 2022, the Company sold its remaining investments in Option Care Health and Guangzhou Pharmaceuticals Corporation, respectively.