P R E S E N T E D BY: M ATT H E W P E T R E L L A

MCKESSON CORP. FINANCIAL ANALYSIS

MCKESSON CORP.COMPANY PROFILE

• Founded in 1833 and headquartered in San Francisco, CA.

• In the “drugs wholesale” industry with 37,700 full-time employees.

• Largest pharmaceutical distributor in North America.

• Nation’s leading health care IT company.

• Software and hardware technology installed in over 70% of the nation’s hospitals.

• Publically traded on the NYSE under the symbol MCK.

COMMON SIZE BALANCE SHEETASSETS

(ALL FIGURES IN MILLIONS)

2012 2011Assets:

Current Assets:Cash… 3,149$ 3,612$ Gross Receivables… 10,099 9,323

Less: Allowance for Bad Debts… (122) (136) Net Receivables… 9,977 9,187 Inventories… 10,073 9,225 Prepaid Expenses… 404 333

Total Current Assets… 23,603$ 22,357$ Long-Term Assets:

Net Tangible Fixed Assets… 1,043$ 991$ Intangible Assets… 1,750 1,456 Other Nonoperating Assets… 5,032 4,364 Other Operating Assets… 1,665 1,718

Total Long-Term Assets… 9,490$ 8,529$

Total Assets… 33,093$ 30,886$

March 31,

COMMON SIZE BALANCE SHEETLIABILITIES & STOCKHOLDERS’ EQUITY

(ALL FIGURES IN MILLIONS)

2012 2011Liabilities:Current Liabilities:

Accounts Payable… 16,114$ 14,090$ Short-Term Loans… 400 - Current Portion of Long-Term Debt… 508 417 Other Current Liabilities… 4,664 4,219

Total Current Liabilities… 21,686$ 18,726$ Long-Term Liabilities:

Long-Term Debt… 3,072$ 3,587$ Other Long-Term Liabilities… 1,504 1,353

Total Long-Term Liabilities… 4,576 4,940

Total Liabilities… 26,262$ 23,666$ Shareholders' Equity:

Common Stock including Retained Earnings… 6,831$ 7,220$

Total Shareholders' Equity… 6,831 7,220

Total Liabilities and Shareholders' Equity… 33,093$ 30,886$

March 31,

BALANCE SHEET—VERTICAL ANALYSISASSETS

2012 2011Assets:

Current Assets:Cash… 9.52% 11.69%Gross Receivables… 30.52% 30.19%

Less: Allowance for Bad Debts… 0.37% 0.44%Net Receivables… 30.15% 29.74%Inventories… 30.44% 29.87%Prepaid Expenses… 1.22% 1.08%

Total Current Assets… 71.32% 72.39%Long-Term Assets:

Net Tangible Fixed Assets… 3.15% 3.21%Intangible Assets… 5.29% 4.71%Other Nonoperating Assets… 15.21% 14.13%Other Operating Assets… 5.03% 5.56%

Total Long-Term Assets… 28.68% 27.61%

Total Assets… 100.00% 100.00%

March 31,

BALANCE SHEET—VERTICAL ANALYSISLIABILITIES & STOCKHOLDERS’ EQUITY

2012 2011Liabilities:Current Liabilities:

Accounts Payable… 48.69% 45.62%Short-Term Loans… 1.21% 0.00%Current Portion of Long-Term Debt… 1.54% 1.35%Other Current Liabilities… 14.09% 13.66%

Total Current Liabilities… 65.53% 60.63%Long-Term Liabilities:

Long-Term Debt… 9.28% 11.61%Other Long-Term Liabilities… 4.54% 4.38%

Total Long-Term Liabilities… 13.83% 15.99%

Total Liabilities… 79.36% 76.62%Shareholders' Equity:

Common Stock including Retained Earnings… 20.64% 23.38%

Total Shareholders' Equity… 20.64% 23.38%

Total Liabilities and Shareholders' Equity… 100.00% 100.00%

March 31,

BALANCE SHEET—HORIZONTAL ANALYSISASSETS

2012 2011Assets:

Current Assets:Cash… 87.18% 100.00%Gross Receivables… 108.32% 100.00%

Less: Allowance for Bad Debts… 89.71% 100.00%Net Receivables… 108.60% 100.00%Inventories… 109.19% 100.00%Prepaid Expenses… 121.32% 100.00%

Total Current Assets… 105.57% 100.00%Long-Term Assets:

Net Tangible Fixed Assets… 105.25% 100.00%Intangible Assets… 120.19% 100.00%Other Nonoperating Assets… 115.31% 100.00%Other Operating Assets… 96.92% 100.00%

Total Long-Term Assets… 111.27% 100.00%

Total Assets… 107.15% 100.00%

March 31,

BALANCE SHEET—HORIZONTAL ANALYSISLIABILITIES & STOCKHOLDERS’ EQUITY

2012 2011Liabilities:Current Liabilities:

Accounts Payable… 114.36% 100.00%Short-Term Loans… N/A N/ACurrent Portion of Long-Term Debt… 121.82% 100.00%Other Current Liabilities… 110.51% 100.00%

Total Current Liabilities… 115.81% 100.00%Long-Term Liabilities:

Long-Term Debt… 85.64% 100.00%Other Long-Term Liabilities… 111.16% 100.00%

Total Long-Term Liabilities… 92.63% 100.00%

Total Liabilities… 110.97% 100.00%Shareholders' Equity:

Common Stock including Retained Earnings… 94.61% 100.00%

Total Shareholders' Equity… 94.61% 100.00%

Total Liabilities and Shareholders' Equity… 107.15% 100.00%

March 31,

COMMON SIZE INCOME STATEMENT

(ALL FIGURES IN MILLIONS)

2012 2011 2010Net Sales… 122,734$ 112,084$ 108,702$ Less: Cost of Goods Sold… (116,167) (106,114) (103,026)

Gross Profit… 6,567 5,970 5,676 Less: Operating Expenses… (4,418) (4,149) (3,668)

Operating Incone… 2,149 1,821 2,008 Less: Interest Expense… (251) (222) (187) Other Income (Expenses)… 21 36 43

Income before Taxes… 1,919 1,635 1,864 Less: Taxes Related to Operations… (516) (505) (601)

Net Income before Noncontrolling Interests & Nonrecurring Items… 1,403 1,130 1,263

Operations of Discontinued Segment; Income (Loss)… - 72 -

Net Income (Loss) 1,403$ 1,202$ 1,263$

Years Ended March31,

INCOME STATEMENTVERTICAL ANALYSIS

2012 2011 2010Net Sales… 100.00% 100.00% 100.00%Less: Cost of Goods Sold… 94.65% 94.67% 94.78%

Gross Profit… 5.35% 5.33% 5.22%Less: Operating Expenses… 3.60% 3.70% 3.37%

Operating Incone… 1.75% 1.62% 1.85%Less: Interest Expense… 0.20% 0.20% 0.17%Other Income (Expenses)… 0.02% 0.03% 0.04%

Income before Taxes… 1.56% 1.46% 1.71%Less: Taxes Related to Operations… 0.42% 0.45% 0.55%

Net Income before Noncontrolling Interests & Nonrecurring Items… 1.14% 1.01% 1.16%

Operations of Discontinued Segment; Income (Loss)… 0.00% 0.06% 0.00%

Net Income (Loss) 1.14% 1.07% 1.16%

Years Ended March31,

INCOME STATEMENTHORIZONTAL ANALYSIS

2012 2011 2010Net Sales… 112.91% 103.11% 100.00%Less: Cost of Goods Sold… 112.76% 103.00% 100.00%

Gross Profit… 115.70% 105.18% 100.00%Less: Operating Expenses… 120.45% 113.11% 100.00%

Operating Incone… 107.02% 90.69% 100.00%Less: Interest Expense… 134.22% 118.72% 100.00%Other Income (Expenses)… 48.84% 83.71% 100.00%

Income before Taxes… 102.95% 87.71% 100.00%Less: Taxes Related to Operations… 85.86% 84.03% 100.00%

Net Income before Noncontrolling Interests & Nonrecurring Items… 111.08% 89.47% 100.00%

Operations of Discontinued Segment; Income (Loss)… N/A N/A N/A

Net Income (Loss) 111.08% 95.17% 100.00%

Years Ended March31,

PROFITABILITY ANALYSIS

2012 2011 2010 2011 2010 20095.35% 5.33% 5.22% 28.35% 28.84% 29.32%

4.39% 8.72%

19.97% 13.25%

94.65% 94.67% 94.78% 71.65% 71.16% 70.68%

3.60% 3.70% 3.37% 21.52% 21.92% 22.22%

1.75% 1.62% 1.85% 6.82% 6.92% 7.10%

McKesson Corp. Henry Schein, Inc.

Gross Profit Margin:

Return on Assets:

Return on Common Equity:

CGS to Sales:

SG&A to Sales:

Operating Income Margin:

LIQUIDITY ANALYSIS

2012 2011 2011 20101,917$ 3,631$ 1,001$ 1,001$

12.04 6.72

12.64 9.00

1.09 1.19 1.79 1.86

0.61 0.68 0.81 0.89

0.15 0.19 0.12 0.13

Current Ratio:

Acid Test:

Cash Ratio

(in Millions)

Inventory Turnover:

Accounts Receivable Turnover:

Working Capital:

McKesson Corp. Henry Schein, Inc.

DEBT ANALYSIS

2012 2011 2011 20100.79 0.77 0.40 0.40

13.83% 15.99% 13.35% 14.56%

3.84 3.28 0.67 0.67

8.65 8.36 20.00 15.76

11.23% 9.88% 29.15% 21.58%

4.84 4.83 4.88 4.69

Henry Schein, Inc.McKesson Corp.

Z-Score:

Debt Ratio:

Times Interest Earned:

Cash Flow to Total Debt:

Long-Term Debt to Assets:

Debt to Equity:

INVESTOR ANALYSIS

2012 2011 2010 2011 2010 200987.77$ 80.12$ 66.72$ 64.43$ 61.39$ 52.60$

29.07$ 28.65$ 31.51$ 29.53$

5.59$ 4.29$ 4.62$ 3.97$ 3.49$ 3.41$

15.70 18.68 14.44 16.23 17.59 15.43

0.91% 0.90% 0.72% NA NA NA

85.60% 83.36% 89.63% 100.00% 100.00% 100.00%

Price/Earnings Ratio:

Dividend Yield:

Earnings Retained (%):

Book Value per Share:

Earnings per Share:

McKesson Corp. Henry Schein, Inc.

Year-End Market Price:

MCKESSON CORP.FINAL ANALYSIS’S OPINION

• The largest player in its industry.

• Currently in the process of a major share buy-back program, raising EPS and share price.

• Company is highly leveraged with a debt-to-equity ratio of 3.84 and a debt ratio of 0.79 compared to Henry Schein, Inc. with 0.67 and 0.40, respectively.

• Despite high debt, there is little risk of bankruptcy with a z-score of 4.84.

• Share price has a steady year-to-year growth of 20% in 2011 & 9.55% in 2012 in addition to a steady dividend.

MCKESSON CORP.FINAL ANALYSIS’S OPINION

• Recommendation: Strong Buy:• McKesson’s dominant market share.

• Anticipate growth in revenues, EPS, and share price.

• Should have an improved revenue mix comprised of higher-margin generic drugs.

• Major Risks:• Possible loss of major accounts.

• Slowing trend in pharmaceutical growth.

• Unfavorable regulatory changes.