McKesson 2012 Annual Report Download - page 105

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
101
22. Segments of Business
We report our operations in two operating segments: McKesson Distribution Solutions and McKesson
Technology Solutions. The factors for determining the reportable segments included the manner in which
management evaluates the performance of the Company combined with the nature of the individual business
activities. We evaluate the performance of our operating segments on a number of measures, including operating
profit before interest expense, income taxes and results from discontinued operations.
The Distribution Solutions segment distributes ethical and proprietary drugs, medical-surgical supplies and
equipment and health and beauty care products throughout North America. This segment also provides specialty
pharmaceutical solutions for biotech and pharmaceutical manufacturers, sells financial, operational and clinical
solutions for pharmacies (retail, hospital, alternate site) and provides consulting, outsourcing and other services.
This segment includes a 49% interest in Nadro, S.A. de C.V. (“Nadro”), one of the leading pharmaceutical
distributors in Mexico.
The Technology Solutions segment delivers enterprise-wide clinical, patient care, financial, supply chain,
strategic management software solutions, pharmacy automation for hospitals, as well as connectivity, outsourcing
and other services, including remote hosting and managed services, to healthcare organizations. This segment also
includes our Payer group of businesses, which includes our InterQual® clinical criteria solution, medical
management tools, claims payment solutions, network performance tools and care management programs. The
segment’s customers include hospitals, physicians, homecare providers, retail pharmacies and payers from North
America, the United Kingdom, Ireland, other European countries and Israel.
Revenues for our Technology Solutions segment are classified in one of three categories: services, software and
software systems and hardware. Services revenues primarily include fees associated with installing our software
and software systems, as well as revenues associated with software maintenance and support, remote processing,
disease and medical management, and other outsourcing and professional services. Software and software systems
revenues primarily include revenues from licensing our software and software systems, including the segment’s
clinical auditing and compliance and InterQual® businesses.
Corporate includes expenses associated with Corporate functions and projects and the results of certain equity-
held investments. Corporate expenses are allocated to the operating segments to the extent that these items can be
directly attributable to the segment.
Effective April 1, 2011, we centralized certain information technology functions from our operating segments to
Corporate. Corporate now manages, provides and charges these services to our operating segments. As a result of
this centralization, certain assets were transferred from our Distribution Solutions segment to Corporate effective
April 1, 2011. Segment depreciation and amortization, expenditures for long-lived assets and assets have been
recast for 2011 and 2010 to reflect the change in the composition of our operating segments. There was no material
change in segment revenue or operating profit as a result of this change.