Redeemable Noncontrolling Interests and Noncontrolling Interests

6 Months Ended

Sep. 30, 2019

Redeemable Noncontrolling Interests and Noncontrolling Interests

Redeemable Noncontrolling Interests

Our redeemable noncontrolling interests primarily relate to our consolidated subsidiary, McKesson Europe AG (“McKesson Europe”). Under the December 2014 domination and profit and loss transfer agreement (the “Domination Agreement”), the noncontrolling shareholders of McKesson Europe are entitled to receive an annual recurring compensation amount of €0.83 per share and a one-time guaranteed dividend for calendar year 2014 of €0.83 per share reduced accordingly for any dividend paid by McKesson Europe in relation to that year. As a result, we recorded a total attribution of net income to the noncontrolling shareholders of McKesson Europe of $11 million and $22 million during the second quarter and first six months of 2020 and $11 million and $23 million during the second quarter and first six months of 2019. All amounts were recorded within net income attributable to noncontrolling interests in our condensed consolidated statements of operations and the corresponding liability balance was recorded within other accrued liabilities on our condensed consolidated balance sheets.

Under the Domination Agreement, the noncontrolling shareholders of McKesson Europe have a right to put (“Put Right”) their noncontrolling shares at €22.99 per share increased annually for interest in the amount of 5 percentage points above a base rate published by the German Bundesbank semi-annually, less any compensation amount or guaranteed dividend already paid by McKesson with respect to the relevant time period (“Put Amount”). The exercise of the Put Right will reduce the balance of redeemable noncontrolling interests. During the second quarters and first six months of 2020 and 2019, there were no material exercises of the Put Right. The balance of redeemable noncontrolling interests is reported as the greater of its carrying value or its maximum redemption value at each reporting date. The redemption value is the Put Amount adjusted each period for exchange rate fluctuations. At September 30, 2019 and March 31, 2019, the carrying value of redeemable noncontrolling interests of $1.38 billion and $1.39 billion exceeded the maximum redemption value of $1.20 billion and $1.23 billion. At September 30, 2019 and March 31, 2019, we owned approximately 77% of McKesson Europe’s outstanding common shares.

Noncontrolling Interests

Noncontrolling interests represent third-party equity interests in our consolidated entities primarily related to ClarusONE and Vantage Oncology Holdings, LLC, which were $210 million and $193 million at September 30, 2019 and March 31, 2019 on our condensed consolidated balance sheets. We allocated a total of $42 million and $85 million of net income to noncontrolling interests during the second quarter and first six months of 2020 and $43 million and $89 million during the second quarter and first six months of 2019.

Changes in redeemable noncontrolling interests and noncontrolling interests for the second quarter and first six months of 2020 were as follows:



(In millions)	Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, June 30, 2019	$	194		$	1,399
Net income attributable to noncontrolling interests	42			11
Other comprehensive loss	—			(18		)
Reclassification of recurring compensation to other accrued liabilities	—			(11		)
Payments to noncontrolling interests	(37		)	—
Other	11			3
Balance, September 30, 2019	$	210		$	1,384



(In millions)	Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, March 31, 2019	$	193		$	1,393
Net income attributable to noncontrolling interests	85			22
Other comprehensive loss	—			(12		)
Reclassification of recurring compensation to other accrued liabilities	—			(22		)
Payments to noncontrolling interests	(76		)	—
Other	8			3
Balance, September 30, 2019	$	210		$	1,384

Changes in redeemable noncontrolling interests and noncontrolling interests for the second quarter and first six months of 2019 were as follows:



(In millions)	Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, June 30, 2018	$	240		$	1,422
Net income attributable to noncontrolling interests	43			11
Other comprehensive loss	—			(7		)
Reclassification of recurring compensation to other accrued liabilities	—			(11		)
Payments to noncontrolling interests	(42		)	—
Other	(33		)	—
Balance, September 30, 2018	$	208		$	1,415



(In millions)	Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, March 31, 2018	$	253		$	1,459
Net income attributable to noncontrolling interests	89			23
Other comprehensive loss	—			(44		)
Reclassification of recurring compensation to other accrued liabilities	—			(23		)
Payments to noncontrolling interests	(106		)	—
Other	(28		)	—
Balance, September 30, 2018	$	208		$	1,415