Held for Sale

12 Months Ended

Mar. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Assets and liabilities that have met the classification as held for sale were $12 million and $9 million, respectively, as of March 31, 2021 and $906 million and $683 million, respectively, as of March 31, 2020. The amounts at March 31, 2020 primarily consisted of the majority of the Company’s German pharmaceutical wholesale business as described below. This disposal group had been recorded as assets and liabilities held for sale since the third quarter of 2020 through its contribution to a joint venture in the third quarter of 2021. Based on its analysis, the Company determined that the disposal groups classified as held for sale do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation.

German Wholesale Joint Venture

On November 1, 2020, the Company completed its previously announced transaction with Walgreens Boots Alliance (“WBA”) whereby the majority of its German pharmaceutical wholesale business was contributed to a newly formed joint venture in which McKesson has a 30% noncontrolling interest.

Consideration received included a receivable amount of $41 million, primarily related to working capital and net debt adjustments from WBA, and the 30% interest in the newly formed joint venture. At the transaction date, the carrying value of the equity investment in the joint venture was recorded at its fair value, which was measured using inputs that fell within Level 3 of the fair value hierarchy. The carrying value of the investment in the joint venture was nil as of March 31, 2021. The Company accounts for its interest in the joint venture as an equity method investment within the International segment. The joint venture also assumed a note payable to the Company in the amount of approximately $291 million as of the transaction date, which was paid to the Company in the third quarter of 2021.

In conjunction with the contribution, the Company recorded losses of $58 million and $275 million (pre-tax and after-tax), respectively, in the years ended March 31, 2021 and 2020, which includes adjustments to remeasure the assets and liabilities held for sale to fair value less costs to sell. These charges were included within “Operating expenses” in the Consolidated Statements of Operations. The Company’s measurement of the fair value of the disposal group was based on estimates of total consideration to be received by the Company as outlined in the contribution agreement between the Company and WBA. As a result of finalization of working capital amounts contributed and other adjustments, the Company may record additional gains or losses in future periods; however, these adjustments are not expected to have a material impact on the Company’s consolidated financial statements.

Following the completion of the transaction on November 1, 2020, there were no assets or liabilities of the German pharmaceutical wholesale joint venture classified as held for sale on the Company’s Consolidated Balance Sheet. The total assets and liabilities of the German pharmaceutical wholesale joint venture that were classified as held for sale on the Company’s Consolidated Balance Sheet as of March 31, 2020, were as follows:


(In millions)	March 31, 2020
Assets
Current Assets
Receivables, net	$	548
Inventories, net	478

Long-term assets	88
Remeasurement of assets of business held for sale to fair value less cost to sell (1)	(272)
Total Assets held for sale	$	842

Liabilities
Current Liabilities
Drafts and accounts payable	$	450
Other accrued liabilities	40
Long-term liabilities	166
Total Liabilities held for sale	$	656

(1)Includes the effect of approximately $3 million of favorable cumulative foreign currency translation adjustment.