McKesson 2010 Annual Report Download - page 108
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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
102
21. 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 based on 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, long-term care) 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 and a 39% interest in Parata, which sells automated pharmacy and supply management
systems and services to retail and institutional outpatient pharmacies.
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. The segment also
includes our Payor group of businesses, which includes our InterQual® claims payment solutions, medical
management software businesses and our care management programs. The segment’s customers include hospitals,
physicians, homecare providers, retail pharmacies and payors from North America, the United Kingdom, Ireland,
other European countries, Asia Pacific 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, certain employee benefits 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.