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McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
32
Distribution Solutions
North America pharmaceutical distribution and services revenues increased in 2014 compared to 2013 primarily due to market
growth, reflecting growing drug utilization and price increases, and our mix of business. These increases were partially offset by
price deflation associated with brand to generics drug conversion. North America revenues for 2013 approximated 2012 primarily
due to market growth and our mix of business, partially offset by price deflation associated with brand to generic drug conversions,
the loss of customers and fewer sales days.
International pharmaceutical distribution and services revenues of $4.8 billion in 2014 represents revenues from Celesio, our
majority-owned subsidiary, acquired in February 2014.
Medical-Surgical distribution and services revenues increased in 2014 compared to 2013 primarily due to our acquisition of
PSS World Medical in February 2013 and market growth. Revenues for 2013 increased compared to 2012 primarily due to market
growth, new customers and our acquisition of PSS World Medical. These 2013 increases were partially offset by five less sales
days.
Technology Solutions
Technology Solutions revenues increased in 2014 compared to 2013 primarily due to small business acquisitions and a higher
volume of claims processing. These increases were partially offset by a decrease in software product revenues. Technology
Solutions revenues increased in 2013 compared to 2012 mainly due to acquisitions, higher volume of claims processing revenues
and an increase in maintenance revenues from new and existing customers.
Gross Profit:
Years Ended March 31, Change
(Dollars in millions) 2014 2013 2012 2014 2013
Gross Profit
Distribution Solutions (1) $ 6,767 $ 5,435 $ 5,057 25 % 7 %
Technology Solutions 1,542 1,413 1,345 9 5
Total $ 8,309 $ 6,848 $ 6,402 21 7
Gross Profit Margin
Distribution Solutions 5.03 % 4.57 % 4.23 % 46 bp 34 bp
Technology Solutions 48.44 46.74 46.43 170 31
Total 6.04 5.61 5.23 43 38
bp - basis points
(1) Gross profit for our Distribution Solutions segment for 2014, 2013 and 2012 includes LIFO charges of $311 million, $13 million and $11 million.
Gross profit increased 21% to $8.3 billion in 2014 and 7% to $6.8 billion in 2013. As a percentage of revenues, gross profit
increased by 43 bp in 2014 and by 38 bp in 2013. Gross profit margin increased in 2014 and 2013 reflecting increases in both of
our operating segments.