McKesson 2015 Annual Report Download - page 29

McKESSON CORPORATION
We could experience losses or liability not covered by insurance.
In order to provide prompt and complete service to our major Distribution Solutions segment’s customers,
we maintain significant product inventory at certain of our distribution centers. While we seek to maintain
property insurance coverage in amounts sufficient for our business, there can be no assurance that our property
insurance will be adequate or available on acceptable terms. One or more large casualty losses caused by fire,
earthquake or other natural disaster in excess of our coverage limits could have a material adverse impact on our
results of operations.
Our business exposes us to risks that are inherent in the distribution, manufacturing, dispensing and
administration of pharmaceuticals and medical-surgical supplies, the provision of ancillary services, the conduct
of our payer businesses (which include care management programs and our nurse advice services) and the
provision of products that assist clinical decision-making and relate to patient medical histories and treatment
plans. If customers or individuals assert liability claims against our products and/or services, any ensuing
litigation, regardless of outcome, could result in a substantial cost to us, divert management’s attention from
operations and decrease market acceptance of our products. We attempt to limit our liability to customers by
contract; however, the limitations of liability set forth in the contracts may not be enforceable or may not
otherwise protect us from liability for damages. Additionally, we may be subject to claims that are not explicitly
covered by contract, such as a claim directly by a patient. We also maintain general liability coverage; however,
this coverage may not continue to be available on acceptable terms, may not be available in sufficient amounts to
cover one or more large claims against us and may include larger self-insured retentions or exclusions for certain
products. In addition, the insurer might disclaim coverage as to any future claim. A successful product or
professional liability claim not fully covered by our insurance could have a material adverse impact on our
results of operations.
The acquisition of Celesio exposes us to additional risks related to providing pharmacy services. Pharmacies
are exposed to risks inherent in the packaging and distribution of pharmaceuticals and other healthcare products,
such as with respect to improper filling of prescriptions, labeling of prescriptions, adequacy of warnings,
unintentional distribution of counterfeit drugs and expiration of drugs. Although Celesio maintains liability
insurance, the coverage may not be adequate to protect us against future claims. If Celesio’s insurance coverage
proves to be inadequate or unavailable or Celesio suffers reputational harm as a result of an error or omission, it
could have a material adverse impact on our results of operations.
The failure of our healthcare technology businesses to attract and retain customers due to challenges in
software product integration or to keep pace with technological advances may significantly reduce our results
of operations.
Our healthcare technology businesses, the bulk of which resides in our Technology Solutions segment,
deliver enterprise-wide and single entity clinical, patient care, financial, supply chain and strategic management
software solutions to hospitals, physicians, homecare providers, retail and mail order pharmacies and payers.
Challenges integrating software products could impair our ability to attract and retain customers and could have a
material adverse impact on our consolidated results of operations and a disproportionate impact on the results of
operations of our Technology Solutions segment.
Future advances in the healthcare information systems industry could lead to new technologies, products or
services that are competitive with the technology products and services offered by our various businesses. Such
technological advances could also lower the cost of such products and services or otherwise result in competitive
pricing pressure or render our products obsolete.
The success of our technology businesses will depend, in part, on our ability to be responsive to
technological developments, pricing pressures and changing business models. To remain competitive in the
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