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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
66
2. Business Combinations
On December 30, 2010, we acquired all of the outstanding shares of US Oncology Holdings, Inc. (“US
Oncology”) of The Woodlands, Texas for approximately $2.1 billion, consisting of cash consideration of $0.2
billion, net of cash acquired, and the assumption of liabilities with a fair value of $1.9 billion. As an integrated
oncology company, US Oncology is affiliated with community-based oncologists, and works with patients,
hospitals, payers and the medical industry across all phases of the cancer research and delivery continuum. The
acquisition of US Oncology expands our existing specialty pharmaceutical distribution business and adds practice
management services for oncologists. The cash paid at acquisition was funded from cash on hand.
The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities
assumed as of the acquisition date:
(In millions)
Amounts
Previously
Recognized as of
Acquisition Date
(Provisional)
(1)
Measurement
Period
Adjustments
Amounts
Recognized
as of
Acquisition
Date
(Provisional
as Adjusted)
Current assets, net of cash acquired
$
546
$
116
$
662
Goodwill
774
34
808
Intangible assets
1,099
(92)
1,007
Other long-term assets
396
(42)
354
Current liabilities
(535)
46
(489)
Current portion of long-term debt (1,751) 16 (1,735)
Other long-term liabilities
(270)
(68)
(338)
Other stockholders’ equity
(15)
(10)
(25)
Net assets acquired, less cash and cash equivalents $ 244 $
—
$ 244
(1) Represents amounts reported in our Form 10-Q for the quarter ended December 31, 2010.
During the fourth quarter of 2011, the fair value measurements of assets acquired and liabilities assumed as of
the acquisition date were revised. Due to the recent timing of the acquisition, these amounts are subject to change
within the measurement period as our fair value assessments are finalized.
Included in the purchase price allocation are acquired identifiable intangibles of $1.0 billion, the fair value of
which was determined by using Level 3 inputs, which are estimated using significant unobservable inputs. Acquired
intangibles primarily consist of $0.7 billion of service agreements and $0.2 billion of customer lists. The estimated
weighted average lives of the service agreements, customer lists and total acquired intangibles are 18 years, 10 years
and 16 years. The fair value of the debt acquired was determined primarily by using Level 3 inputs, which are
estimated using significant unobservable inputs. Refer to Financial Note 11, “Debt and Financing Activities,” for
additional information on the assumption and funding of acquired debt. The excess of the purchase price over the
net tangible and intangible assets of approximately $808 million was recorded as goodwill, which primarily reflects
the expected future benefits to be realized upon integrating the business.
Financial results for US Oncology have been included in the results of operations within our Distribution
Solutions segment beginning in the fourth quarter of 2011. We recorded $52 million of net acquisition-related
expenses in 2011 as follows: