This document provides an overview from Paul Julian, Executive Vice President and Group President at McKesson Corporation, at the 2006 Lehman Brothers Healthcare Conference. The summary includes: 1) McKesson is a $80.5 billion healthcare company with over 25,000 employees. 2) McKesson's business segments include pharmaceutical distribution, medical-surgical distribution, and provider technologies. 3) McKesson has shown strong financial performance over the past five years with revenues growing at a 7% CAGR and EPS growing at a 27% CAGR.

1. Lehman
Brothers
Healthcare
Conference
March 10, 2006

2. Paul Julian
Executive Vice President
and
Group President
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2006 Lehman Brothers Healthcare Conference

3. Safe Harbor Clause
Some of the information in this presentation may constitute
forward-looking statements that are subject to various
uncertainties. These uncertainties could cause actual results
to differ materially from those projected or implied. The risk
factors associated with those uncertainties are described in
the Company’s reports and exhibits filed with the Securities
and Exchange Commission. Financial information is
presented here in summary form. Full details are provided in
the Company’s most recent 10-Q report. All of this information
is available at www.mckesson.com. The Company assumes
no obligation to update or revise any such statements,
whether as a result of new information or otherwise.
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4. McKesson Facts
Medical-Surgical
FY05 REVENUES
$80.5 billion in revenues in $2.9 B
FY05 Provider
Pharma Technologies
FY05 EPS $2.19 (excluding Solutions $1.3 B
$76.3 B
Securities Litigation charge**,
loss of $0.53, as reported)
Over 25,000 employees
306 million shares outstanding* FY05 OPERATING PROFIT Medical-Surgical
$102 M
$16.5 billion market cap
Pharma Provider
Founded 1833, headquartered Solutions Technologies
in San Francisco $1 B $107 M
160% Return to Shareholders since April 1, 2000
* As of quarter ended 12/31/05
**See Schedule 1 from 5/5/05 press release for reconciliation
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5. Healthcare Trends
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6. Healthcare Trends Drive
McKesson Strategy and Growth
Focus on
McKesson provides health
managing
McKesson handles over 30%
management solutions
chronic
of the nation’s drug needs
Demographics across spectrum
diseases
drive drug
Increased involvement by
consumption consumers in their own
healthcare
McKesson solutions provide
supply chain integrity and
Focus on
reduce medication errors –
patient safety bar-code mandate for
hospitals
McKesson solutions deliver
Technology best practice information at
point of care
improves
healthcare Pressure to McKesson delivers
Demand by payors and
quality control solutions to manage the
employers for improved
healthcare
outcomes complex handoffs in a
fragmented industry
costs
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7. Medicare Modernization Act
Provides Opportunities Across
McKesson
Automation
Pharmaceutical
Medicare
Distribution Volume
Patient safety
Volume
Modernization
Generics
Netw ork administration
Act
Health Provider
Solutions
Technologies
Disease management Electronic Prescribing
Medication management Quality incentives for hospitals
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8. McKesson Overview
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9. Delivering Value from the
Center of Healthcare
Solutions for
medication safety
Pharmaceutical & medical-
surgical distribution to all sites
Information solutions
for hospitals, payors,
home care, and
physicians
Inpatient automation
Specialty
Retail pharmacy pharmaceuticals
automation
Disease
Pharmacy outsourcing
management
Pharmaceutical
and consulting
repackaging
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10. Leader in Growing Areas
Canadian Pharmaceutical
$12 B US
5-7% projected growth (1)
U.S. Medical-Surgical
$80 B
U.S. Pharmaceutical
6-8% projected growth (2)
$234 B
5-7% projected growth (1)
HIT – Hospital and
Alternate Site
$20 B
8-11% projected growth (3)
Payor – Outsourced and
Software
$8 B
(1) IMS
20-25% projected growth (4)
(2) Medical Devices & Supplies M arket Update
(3) Dornfest, Gartner Aug 2003, Forrester
(4) Includes medical management s oftware/c ontent, diseas e management, coding, compliance ser vices
Well positioned in all growing healthcare areas
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11. McKesson’s Strategy
To bring together clinical knowledge, process
expertise, technology, and the resources of
a Fortune 15 company to fundamentally
change the cost and quality of healthcare.
Create long-term Introduce
relationships based Sell McKesson’s innovations that
on custom solutions comprehensive address emerging
that deliver offering healthcare
ROI & quality challenges
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12. Long-term Relationships
with Market Leaders
Vanderbilt University Medical Center
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13. Market Leading Positions
in Healthcare Services
McKesson McKesson McKesson
Pharmaceutical Medical-
Medical-Surgical Provider Technologies
#1 in U.S., Canada, and
#1 in primary care 63% of health systems
Mexico
51% of hospitals with
Large Rx repackaging #1 in extended care
200+ beds
Leading generics provider Total supply
Leader in clinical,
solution in acute
#1 in retail pharmacy revenue cycle,
care
automation and resource
management solutions
Private label
Specialty distribution &
product offerings
patient services for More “Best in KLAS”
manufacturers products than any
Rapid growth in other vendor
#1 in medical management physician office
software and services for pharmaceuticals #1 in robotic hospital
payors and equipment pharmacy dispensing
#1 in disease management #1 in bedside scanning
for Medicaid agencies
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14. McKesson U.S. Pharmaceutical
Supply Chain Safety Leadership
Benefits for
Supply Chain:
Product integrity
19 19 20
19
19 20
90 98 02
99
93 Product visibility
06
s
Availability
Accuracy
First use Only Six Flawless
of Bar Sigma execution:
Verified pedigree
Codes in Distributor Best-in-
DCs class Rapid delivery
Award First mobile Leader in
computing: service
Winning RFID
Acumax® Closed technology
in all DCs Loop
DistributionSM
tool
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15. McKesson Value-Added U.S.
Pharmaceutical Distribution
Industry-leading service levels
Next day deliveries with 99% fill rates
99.74% invoice pricing integrity vs. 99.3% industry average
Aggregation of delivery
RDC reduces shipping and delivery costs for 500+ manufacturers
Centralized ServiceFirst Call Center
7 million calls annually, #1 in industry by Purdue Benchmark Research
Broadest value-adding offering
Automation for retail, hospital and mail order
Central Fill
Generics
Continuous improvement
Six Sigma since 1998 for McKesson and our customers
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16. Patent Expirations Driving
Increased Generics Sales
Annual Patent Expirations Est. U.S. Generics Industry
$ Billions $ Billions
$31
$20 $28
$26
$16 $23
$15
$14 $20
$17
$11
$9
03
04
05
06
07
08
03
04
05
06
07
08
20
20
20
20
20
20
20
20
20
20
20
20
CAGR 2003-2008 : 12.8%; Merrill Lynch; IMS; McKesson analysis
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17. Strong FY06 Momentum in Provider
Technologies
Customer Accountability
20 Products
9%
Satisfaction
Ranked in Top 3
Up 9% Of 2005 KLAS Report *
* Top 20 Year-End Best In KLAS Awards
* Top 20 Year-End Best In KLAS Awards
Employee Revenues 19%
Satisfaction
World Up 19%
Class
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18. Financial Performance
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19. Five Years of Strong Growth
$80.5
$Billions
s)
$24.1
sale $69.5
Warehouse Sales ota l
R (t
CAG
Direct Revenues
7%
1 $57.1
$21.6
$50.0
$14.8
$42.0
$13.2
$36.7
$10.7
$8.7
$56.4
$47.9
$42.3
$36.8
$31.3
$28.0
0 1 2 3 4 5
Y0 Y0 Y0 Y0 Y0 Y0
F F F F F F
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20. EPS
(continuing operations)
Diluted EPS, continuing operations**
AGR
C
27 % $2.18
$2.18
$1.89
$1.43
$0.65
($0.15)
00
01
02
03
04
05
FY
FY
FY
FY
FY
FY
**See EPS Reconciliation slide at the end of this presentation for a complete reconciliation to reported results.
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21. FY06 Consolidated Q3 and YTD
Financial Results
($ and shares in millions,
Q3 Nine Months
except EPS)
FY05 FY06 FY05 FY06
Revenues $ 20,769 $ 22,602 $ 59,866 $ 65,265
9% 9%
Net Income
-- As reported (666) 193 (416) 531
NM NM
-- Continuing ops, excluding
143 193 392 552
Securities Litigation charge** 35% 41%
Diluted EPS
-- As reported $ (2.26) $ 0.61 $ (1.42) $ 1.69
NM NM
-- Continuing ops, excluding
$ 0.49 $ 0.61 $ 1.32 $ 1.76
Securities Litigation charge** 24% 33%
**See EPS Reconciliation slide at the end of this presentation for a complete reconciliation to reported results.
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22. Q3 and YTD
FY06 Segment Results
Strong results in Pharmaceutical Solutions and Provider Technologies drove
improved quarterly and YTD performance
Q3 Nine Months
FY05 FY06 FY05 FY 06
Var. Var.
($ in millions)
Revenues
Pharmaceutical Solutions $19,702 $21,387 $56,774 $61,827
9% 9%
Medical-Surgical 736 814 2,157 2,327
11% 8%
Provider Technologies 331 401 935 1,111
21% 19%
Total $20,769 $22,602 $59,866 $65,265
9% 9%
Operating Profit
Pharmaceutical Solutions $243 $306 $682 $860
26% 26%
Medical-Surgical 24 8 71 60
-67% -15%
Provider Technologies 28 38 61 95
36% 56%
Total $295 $352 $814 $1,015
19% 25%
* Excludes Warehouse Sal es
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23. Strong, Flexible Balance Sheet
December 31,
($ in millions)
FY05 FY06
Cash and Cash Equivalents $ 1,033 $ 2,183
Operating Cash Flow - Nine Months $ 497 $ 1,477
Debt to Capital 22.9% 14.4%
Net Debt to Net Capital Employed 8.0% -25.3%
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24. Financial Flexibility to Create
Shareholder Value
Improving
Resolution of
Strong
Business
Shareholder
Balance Performance
Litigation
Sheet and Cash Flow
STRATEGIC OPTIONS FOR CASH
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25. What McKesson Represents
Management with strong track record of financial performance
Core pharmaceutical business positioned for growth
Stable of higher margin businesses poised to take advantage of
the evolution of healthcare
Strong cash flow and balance sheet, providing flexibility to increase
shareholder value
Commitment to financial transparency and communication
Create Value for Suppliers,
Customers and Shareholders
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27. EPS Reconciliation
($ and shares in millions except EPS)
FY04 FY05
Net income (loss), continuing ops
$ 643 $ (160)
- as reported
Exclude:
- 1,200
Securities Litigation charge
- (390)
Estimated income tax benefit
- 810
Net income, continuing ops, excluding
$ 643 $ 650
Securities Litigation charge
Diluted earnings per common
share, continuing ops, excluding Securities
$ 2.18 $ 2.18
Litigation charge *
Shares on which diluted
earnings per common
299 301
share were based *
* For the years ended March 31, 2005 and 2004, interest expense, net of related income taxes, of $6.2 m illion has been added to net
incom e, excluding the Securities Litigation charge, for purposes of calculating diluted earnings per share. This calculation also
includes the im pact of dilutive securities (stock options, convertible junior subordinated debentures and restricted stock).
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28. EPS Reconciliation
($ and shares in millions, except EPS) Q3 Nine Months
FY05 FY06 FY05 FY06
Net income, (loss) continuing ops
- as reported $ (667) $ 193 -% $ (418) $ 517 -%
Exclude:
Securities Litigation charge 1,200 1 - 1,200 53 -
Estimated income tax benefit (390) (1) - (390) (18) -
810 0 - 810 35 -
Net income, continuing ops,
$ 143 $ 193 35 % $ 392 $ 552 41 %
excluding Securities Litigation charge
Diluted earnings per common
share, continuing ops,
$ 0.49 $ 0.61 24 % $ 1.32 $ 1.76 33 %
excluding Secuities Litigation charge
Shares on which diluted
earnings per common
share were based 301 316 5% 300 315 5%
For the quarter and nine m onths ended Decem ber 31, 2004, interest expense, net of related income taxes, of $2 m illion, and $5
m illion has been added to net income, excluding the securities litigation charge, for purposes of calculating diluted earnings per
share. This calculation also includes the impact of dilutive securities (stock options, convertible junior subordinated debentures
and restricted stock).
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