McKesson MCK · USD

Segments of Business The Company reports its financial results in four operating and reportable segments: U.S. Pharmaceutical, RxTS, Medical-Surgical Solutions, and International. The organizational structure also includes Corporate, which consists of income and expenses associated with administrative functions and projects, and the results of certain investments and operations. The factors for determining the segments include the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities. The Company evaluates the performance of its operating segments on a number of measures, including revenues and operating profit (loss) before interest expense and income taxes. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM uses operating profit (loss) before interest expense and income taxes to assess performance and allocate resources for each reportable segment during the Company’s annual long-term planning process and through quarterly operating reviews focused on each segment’s results compared to the budget and rolling forecast. The CODM is regularly provided with budgeted or forecasted expense information for the segment and also uses consolidated expense information. Assets by segment are not a measure used to assess the performance of the Company by the CODM and thus are not reported in our disclosures. The U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs, and other healthcare-related products in the U.S. This segment also provides practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices. In addition, the segment sells financial, operational, and clinical solutions to pharmacies (retail, hospital, alternate sites) and provides consulting, outsourcing, technological, and other services. The RxTS segment helps solve medication access, affordability, and adherence challenges for patients by working across healthcare to connect patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies. RxTS serves our biopharma and life sciences partners, delivering innovative solutions that help people get the medicine they need to live healthier lives.

Commitments and Contingent Liabilities In addition to commitments and obligations incurred in the ordinary course of business, the Company is subject to a variety of claims and legal proceedings, including claims from customers and vendors, pending and potential legal actions for damages, governmental investigations, and other matters. The Company is vigorously defending itself against those claims and in those proceedings. Significant developments in those matters are described below. If the Company is unsuccessful in defending, or if it determines to settle, any of these matters, it may be required to pay substantial sums, be subject to injunction and/or be forced to change how it operates its business, which could have a material adverse impact on its financial position or results of operations. Unless otherwise stated, the Company is unable to reasonably estimate the loss or a range of possible loss for the matters described below. Often, the Company is unable to determine that a loss is probable, or to reasonably estimate the amount of loss or a range of loss, for a claim because of the limited information available and the potential effects of future events and decisions by third parties, such as courts and regulators, that will determine the ultimate resolution of the claim. Many of the matters described are at preliminary stages, raise novel theories of liability, or seek an indeterminate amount of damages. It is not uncommon for claims to remain unresolved over many years. The Company reviews loss contingencies at least quarterly to determine whether the likelihood of loss has changed and whether it can make a reasonable estimate of the loss or range of loss. When the Company determines that a loss from a claim is probable and reasonably estimable, it records a liability for an estimated amount. The Company also provides disclosure when it is reasonably possible that a loss may be incurred or when it is reasonably possible that the amount of a loss will exceed its recorded liability. Amounts included within “Claims and litigation charges, net” in the Consolidated Statements of Operations consist of estimated loss contingencies related to opioid-related litigation matters, as well as any applicable income items or credit adjustments due to subsequent changes in estimates.

Debt and Financing Activities Long-term debt consisted of the following: March 31, (In millions) 2025 2024 U.S. Dollar notes (1) (2) 0.90% Notes due December 3, 2025 500 500 5.25% Notes due February 15, 2026 — 499 1.30% Notes due August 15, 2026 499 499 7.65% Debentures due March 1, 2027 150 150 3.95% Notes due February 16, 2028 343 343 4.90% Notes due July 15, 2028 399 399 4.75% Notes due May 30, 2029 196 196 4.25% Notes due September 15, 2029 500 — 5.10% Notes due July 15, 2033 597 596 6.00% Notes due March 1, 2041 217 218 4.88% Notes due March 15, 2044 255 255 Foreign currency notes (1) (3) 1.50% Euro Notes due November 17, 2025 649 646 1.63% Euro Notes due October 30, 2026 541 540 3.13% Sterling Notes due February 17, 2029 581 568 Lease and other obligations 227 220 Total debt 5,654 5,629 Less: Current portion 1,191 50 Total long-term debt $ 4,463 $ 5,579 (1) These notes are unsecured and unsubordinated obligations of the Company. (2) Interest on these U.S. dollar notes is payable semi-annually. (3) Interest on these foreign currency notes is payable annually. Long-Term Debt The Company’s long-term debt includes both U.S. dollar and foreign currency-denominated borrowings. At March 31, 2025 and 2024, $5.7 billion and $5.6 billion, respectively, of total debt was outstanding, of which $1.2 billion and $50 million, respectively, was included under the caption “Current portion of long-term debt” in the Company’s Consolidated Balance Sheets. Public Offerings On September 10, 2024, the Company completed a public offering of 4.25% Notes due September 15, 2029 in a principal amount of $500 million (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually on March 15th and September 15th of each year, commencing on March 15, 2025. Proceeds received from the issuance of the 2029 Notes, net of discounts and offering expenses, were $496 million. The Company utilized the net proceeds from the offering of the 2029 Notes together with cash on hand to redeem its $500 million outstanding principal amount of 5.25% Notes due February 15, 2026 (the “2026 Notes”), which became callable on or after February 15, 2024, prior to maturity at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest through the redemption date.

Income Taxes Years Ended March 31, (In millions) 2025 2024 2023 Income from continuing operations before income taxes U.S. $ 3,735 $ 2,597 $ 3,308 Foreign 624 1,192 1,322 Income from continuing operations before income taxes $ 4,359 $ 3,789 $ 4,630 Income tax expense related to continuing operations consists of the following: Years Ended March 31, (In millions, except percentages) 2025 2024 2023 Current Federal $ 552 $ 867 $ 619 State 182 231 126 Foreign 254 134 180 Total current 988 1,232 925 Deferred Federal 102 (360) (46) State 5 (133) 36 Foreign (217) (110) (10) Total deferred (110) (603) (20) Income tax expense $ 878 $ 629 $ 905 Reported income tax rate 20.1 % 16.6 % 19.5 % Fluctuations in the Company’s reported income tax rates are primarily due to changes in the business mix of earnings between various taxing jurisdictions, including the impact of non-cash pre-tax charges related to the remeasurement of the Canadian retail disposal group to fair value less costs to sell as described in Financial Note 2, "Business Acquisitions and Divestitures," and recognized discrete tax items. The reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate of 21.0% to income before income taxes was as follows: Years Ended March 31, (In millions) 2025 2024 2023 Income tax expense at federal statutory rate $ 915 $ 796 $ 972 State income taxes, net of federal tax benefit 145 104 134 Tax effect of foreign operations (25) (16) (85) Foreign-derived intangible income (83) (67) (60) Unrecognized tax benefits and settlements 91 116 6 Net tax benefit on intellectual property repatriation and sales (258) (104) — Canadian disposal transaction loss 140 — — Valuation allowance release — (157) — Share-based compensation (42) (37) (58) Other, net (5) (6) (4) Income tax expense $ 878 $ 629 $ 905 During the year ended March 31, 2025, the Company recognized a net discrete tax benefit of $258 million related to the sales of certain intellectual property between McKesson wholly-owned legal entities based in foreign tax jurisdictions. The transferor entities of the intellectual property were not subject to income tax on their transaction. The recipient entities of the intellectual property are entitled to amortize the fair value of the assets for tax purposes.

Share-Based Compensation The Company provides share-based compensation to its employees, officers, and non-employee directors, including restricted stock units (“RSUs”), performance-based stock units (“PSUs”), and an employee stock purchase plan (“ESPP”) (collectively, “share-based awards”). Most of the share-based awards are granted in the first quarter of each fiscal year. Share-based compensation expense for the share-based awards is recognized for the portion of awards ultimately expected to vest. The Company estimates the number of share-based awards that will ultimately vest primarily based on historical experience. The estimated forfeiture rate established upon grant is re-assessed throughout the requisite service period and is adjusted when actual forfeitures occur. The actual forfeitures in future reporting periods could be higher or lower than current estimates. Share-based compensation expense is classified in the Consolidated Statements of Operations in the same manner as cash compensation paid to the Company’s employees and included in “Selling, distribution, general, and administrative expenses.” Impact on Net Income The components of share-based compensation expense and related tax benefits were as follows: Years Ended March 31, (In millions) 2025 2024 2023 Restricted stock unit awards (1) $ 211 $ 168 $ 149 Employee stock purchase plan 15 14 13 Share-based compensation expense 226 182 162 Tax benefit for share-based compensation expense (85) (72) (87) Share-based compensation expense, net of tax $ 141 $ 110 $ 75 (1) Includes share-based compensation expense recognized for RSUs and PSUs. Stock Plans In April 2022, the Company’s stockholders approved the McKesson Corporation 2022 Stock Plan (the “2022 Stock Plan”), which permits the grant of awards in the form of restricted stock, RSUs, PSUs, stock options, and other share-based awards to selected employees, officers, and non-employee directors. As of March 31, 2025, 4.2 million shares remain available for future grant under the 2022 Stock Plan. Restricted Stock Unit Awards RSUs entitle the holder to receive a specified number of shares of the Company’s common stock which vest over a period of generally three Non-employee directors receive an annual grant of RSUs, which vest immediately and are expensed upon grant. The director may elect to receive the underlying shares immediately or defer receipt of the shares if they meet director stock ownership guidelines.

Leases Lessee Supplemental balance sheet information related to leases was as follows: March 31, (In millions, except lease term and discount rate) 2025 2024 Operating leases Operating lease right-of-use assets $ 1,782 $ 1,729 Current portion of operating lease liabilities $ 258 $ 295 Long-term operating lease liabilities 1,478 1,466 Total operating lease liabilities $ 1,736 $ 1,761 Finance leases Property, plant, and equipment, net $ 177 $ 165 Current portion of long-term debt $ 32 $ 30 Long-term debt 163 163 Total finance lease liabilities $ 195 $ 193 Weighted-average remaining lease term (years) Operating leases 8.0 7.0 Finance leases 6.3 7.0 Weighted-average discount rate Operating leases 4.11 % 3.62 % Finance leases 3.27 % 2.98 % The components of lease cost were as follows: Years Ended March 31, (In millions) 2025 2024 2023 Short-term lease cost $ 8 $ 14 $ 20 Operating lease cost 418 418 384 Finance lease cost: Amortization of right-of-use assets 30 25 24 Interest on lease liabilities 7 5 6 Total finance lease cost 37 30 30 Variable lease cost (1) 139 131 128 Sublease income (36) (35) (33) Total lease cost (2) $ 566 $ 558 $ 529 (1) These amounts include payments for maintenance, taxes, payments affected by the consumer price index, and other similar metrics and payments contingent on usage. (2) These amounts were primarily recorded in “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations. Supplemental cash flow information related to leases was as follows: Years Ended March 31, (In millions) 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ (404) $ (339) $ (338) Operating cash flows from finance leases — (1) (1) Financing cash flows from finance leases (39) (47) (29) Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 599 $ 391 $ 462 Finance leases 18 21 17 Maturities of lease liabilities as of March 31, 2025 were as follows: (In millions) Operating Leases Finance Leases Total Fiscal 2026 $ 313 $ 37 $ 350 Fiscal 2027 304 38 342 Fiscal 2028 261 35 296 Fiscal 2029 226 32 258 Fiscal 2030 197 26 223 Thereafter 777 49 826 Total lease payments (1) 2,078 217 2,295 Less imputed interest (342) (22) (364) Present value of lease liabilities $ 1,736 $ 195 $ 1,931 (1) Total lease payments are not reduced by future minimum sublease income of $224 million, which is due under noncancellable subleases.

Business Acquisitions and Divestitures Acquisitions Rx Savings Solutions, LLC On November 1, 2022, the Company completed its acquisition of 100% of the shares of Rx Savings Solutions, LLC (“RxSS”), a privately-owned company headquartered in Overland Park, Kansas, to further connect biopharma and payer services to patients. RxSS is a prescription price transparency and benefit insight company that offers affordability and adherence solutions to health plans and employers. The purchase consideration included a payment of $600 million in cash made upon closing and a maximum of $275 million of contingent consideration based on RxSS’ operational and financial performance through calendar year 2025. The payment made upon closing was funded from cash on hand. The financial results of RxSS are included in the Company’s RxTS segment as of the acquisition date. The transaction was accounted for as a business combination. The Company recorded a liability for the contingent consideration at its fair value of $92 million as of the acquisition date. The fair value of the contingent consideration liability was estimated using a Monte Carlo simulation model, utilizing internal cash flow projections which are Level 3 inputs under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures . The contingent consideration liability will be remeasured to fair value at each reporting date until the liability is settled with changes in fair value being recognized within “Selling, distribution, general, and administrative expenses” in the Company’s Consolidated Statements of Operations. During the year ended March 31, 2024, the Company recognized fair value adjustment gains of $78 million, which reduced its contingent consideration liability, based on the estimated amount and timing of projected operational and financial information and the probability of achievement of performance milestones. As of March 31, 2025 and 2024, the current portion of the contingent consideration liability of $14 million is included within “Other accrued liabilities.” Recognition of the initial fair value of this contingent consideration was a non-cash investing activity. The purchase price allocation included acquired identifiable intangible assets of $229 million, primarily representing customer relationships and technology with a weighted average amortization period of 12 years, and goodwill of $463 million.

Risk Management and Security As a diversified healthcare services leader that is dedicated to advancing health outcomes for patients everywhere , cybersecurity risk management is integral to our enterprise risk management strategy. Our management, with involvement and input from external consultants and oversight from our Board of Directors (“Board”), performs an annual enterprise-wide risk assessment (“ERA”) to identify key existing and emerging risks. One of the principal risks identified and assessed through this process is cybersecurity, which remains a key focus for the Company, management, and our Board. Our Cybersecurity Risk Management Program (“RM Program”) is aligned with the National Institute of Standards and Technology Cybersecurity Framework and other industry best practices. The RM Program is designed to identify, assess and mitigate material cybersecurity risks. We have implemented cybersecurity controls designed to protect our systems, data and operations from cybersecurity risks. Enterprise-wide cybersecurity and privacy training continue to serve an important role in risk reduction and protection of the Company and our stakeholders. We require periodic access-based and role-based privacy and cybersecurity training, which is updated to reflect changes in the threat environment, audit findings, laws, and regulations. We also engage and educate employees through cybersecurity and privacy awareness programs and communication campaigns. Our Cybersecurity Incident Response Plan (“Response Plan”) provides a framework for responding to cybersecurity incidents . The Response Plan governs activities such as preparation, detection, coordination, eradication, recovery, and appropriate escalations to the Company’s senior management, disclosure committee, Board, and relevant Board committees. The Response Plan is routinely tested, reviewed and updated as appropriate under the leadership of our Chief Information Officer and Chief Technology Officer (“CIO/CTO”) with the assistance of the Company’s Chief Information Security Officer (“CISO”). We also engage internal and external assessors, consultants, auditors, and other third parties, to assess our RM Program . We manage cybersecurity risks associated with third parties, including vendors, service providers, and external users of our systems.