McKesson 2008 Annual Report Download - page 63

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
56
We regularly receive requests for information and occasionally subpoenas from government authorities.
Although we believe that we are in compliance, in all material respects, with applicable laws and regulations, there
can be no assurance that a regulatory agency or tribunal would not reach a different conclusion concerning the
compliance of our operations with applicable laws and regulations. In addition, there can be no assurance that we
will be able to maintain or renew existing permits, licenses or any other regulatory approvals or obtain without
significant delay future permits, licenses or other approvals needed for the operation of our businesses. Any
noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary
permits and licenses could have an adverse impact on our results of operations.
Regulations relating to patient confidentiality and to format and data content standards could depress the
demand for our products and impose significant product redesign costs and unforeseen liabilities on us.
State and federal laws regulate the confidentiality of patient records and the circumstances under which those
records may be released. These regulations govern the disclosure and use of confidential patient medical record
information and require the users of such information to implement specified security measures. Regulations
currently in place governing electronic health data transmissions continue to evolve and are often unclear and
difficult to apply. Although our systems have been updated and modified to comply with the current requirements
of state laws and the Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), evolving laws
and regulations in this area could restrict the ability of our customers to obtain, use or disseminate patient
information or could require us to incur significant additional costs to re-design our products in a timely manner,
either of which could have an adverse impact on our business.
The length of our sales and implementation cycles for our Technology Solutions segment could have an
adverse impact on our future operating results.
Many of the solutions offered by our Technology Solutions segment have long sales and implementation cycles,
which could range from a few months to over two years or more from initial contact with the customer to
completion of implementation. How and when to implement, replace, or expand an information system, or modify
or add business processes, are major decisions for healthcare organizations. Many of the solutions we provide
typically require significant capital expenditures and time commitments by the customer. Any decision by our
customers to delay implementation could have an adverse impact on our results of operations. Furthermore, delays
or failures to meet milestones established in our agreements may result in a breach of contract, termination of the
agreement, damages and/or penalties as well as a reduction in our margins or a delay in our ability to recognize
revenue.
We may be required to record a significant charge to earnings if our goodwill or intangible assets become
impaired.
We are required under generally accepted accounting principles to test our goodwill for impairment at least
annually as well as review our intangible assets for impairment when events or changes in circumstances indicate
the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that
the carrying value of our intangible assets may not be recoverable include slower growth rates and the loss of a
significant customer. We may be required to record a significant charge to earnings in our consolidated financial
statements during the period in which any impairment of our goodwill or intangible assets is determined. This could
have an adverse impact on our results of operations.