McKesson to Acquire Leading Cardiology Solution; Medcon Ltd., Positions McKesson as Leader in Enterprise Imaging.

SAN FRANCISCO -- McKesson Corporation (NYSE:MCK) today announced that it has signed a definitive agreement to acquire Medcon, Ltd., an Israeli company, by means of a merger, for US$3.05 per share or approximately US$105 million on a fully diluted basis. Medcon is a global provider of Web-based cardiac image and information management addressing the full spectrum of needs for heart centers, including diagnostic digital image management and archiving, procedure reporting, and workflow management. The addition of Medcon will further strengthen McKesson's leadership in enterprise imaging, which includes integrated solutions for medical specialties such as radiology, gastroenterology, ophthalmology, and cardiology. The company has more than 300 system installations around the world, including more than 100 customers in North America. The acquisition is expected to close in McKesson's second fiscal quarter and is subject to Medcon shareholder and regulatory approvals, as well as other customary conditions.

Medcon reported sales of approximately US$17 million for the 12 months ended December 31, 2004. The acquisition will have no material impact on McKesson's Fiscal 2006 earnings per fully diluted share, however, certain one-time costs, consisting primarily of the write-off of in-process research and development expense, will result in a negative impact to McKesson Provider Technologies' operating profit in fiscal 2006. In Fiscal 2007, the acquisition is expected to be modestly accretive to both McKesson Provider Technologies' operating profit and McKesson earnings per fully diluted share.

"Medcon's integrated cardiology imaging and IT solution will be a strong addition to our enterprise imaging strategy, and we believe it will accelerate McKesson's reach into one of the fastest-growing, high-cost medical specialties in hospitals," said Pamela Pure, president of McKesson Provider Technologies (MPT). "Less than 15 percent of hospitals in the United States have a robust, integrated solution for cardiology, which next to radiology is the largest producer and consumer of images and associated patient information. We see a significant opportunity to grow our position in a $250 million market category that's expected to encompass more than 1,500 decisions over the next five years. The addition of Medcon should also stimulate added growth in our Horizon Medical Imaging PACS business, which has been highly successful -- in the past year alone, we added a record number of new customers, increasing system usage by 40 percent."

Medcon's comprehensive approach to cardiology will support McKesson's strategy for enterprise image management as a component in building EHRs. McKesson's EHR strategy includes enterprise access to all forms of patient data ranging from structured clinical findings to diagnostic images, waveforms, document images, voice and video, all using industry-standard storage methods. "This information-rich, enterprise-based approach enables our customers to provide clinicians with orders, results, vital signs and other patient data based on their natural workflow," said Sunny Sanyal, MPT group president, clinical solutions. "With easier online access to information, the stage is set to drive broad-scale adoption of clinical IT tools that help to make healthcare safer."

McKesson's enterprise imaging solutions are designed to improve workflow productivity, enable informed clinical decision-making and facilitate access to comprehensive electronic health records (EHRs). Medcon's flagship product, TCS Symphony, aggregates all cardiology information sources in one patient-centric information system which can be used to manage the diagnostic process and patient management. Information sources include multi-modality images from echo, cath and nuclear medicine, as well as waveforms from hemodynamic and ECG systems, measurement data derived from images and waveforms, and structured clinical findings. Web-based, secure access to an integrated view of images and information helps to ensure that physicians and other clinicians have the diagnostic information needed to reduce medical errors, speed care delivery, improve quality and support clinical collaboration.

By automating all aspects of the workflow process, Medcon also helps to improve cardiologist productivity and drive more throughput for cardiac procedures. As a result, more patients can be treated with existing staff, setting the stage for higher revenue and greater profitability per procedure. Other benefits include improved charge capture for accurate billing and reimbursement as well as more efficient use of inventory and other resources.

Uzi Blumensohn, Medcon Chairman and CEO, noted that Medcon will enable McKesson to accelerate its efforts in the cardiac market with an effective solution and a satisfied customer base. "McKesson and Medcon share a common vision of providing a single point of access to the patient's entire imaging record," said Blumensohn. "As part of the McKesson family, we will be able to deliver unsurpassed integrated cardiac imaging solutions across the enterprise for optimized workflow and improved cardiac patient care."

Uzi Blumensohn and all other personnel associated with sales, installation, development and support will become part of McKesson Provider Technologies.

About McKesson

McKesson Corporation is a Fortune 15 healthcare services and information technology company dedicated to helping its customers deliver high-quality healthcare by reducing costs, streamlining processes, and improving the quality and safety of patient care. Over the course of its 170-year history, McKesson has grown by providing pharmaceutical and medical-surgical supply management across the spectrum of care; healthcare information technology for hospitals, physicians, homecare, and payors; hospital and retail pharmacy automation; and services for manufacturers and payors designed to improve outcomes for patients. For more information on the Medcon announcement, visit www.mpt.mckesson.com.

Except for the historical information contained herein, the matters discussed in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those projected. These statements may be identified by their use of forward-looking terminology such as "believes," "expects," "anticipates," "may," "will," "should," "seeks," "approximates," "intends," "plans," "estimates" or the negative of these words or other comparable terminology, and include reference to timing and completion of the merger, financial impact of the merger in fiscal 2006 and 2007, acceleration of McKesson's sales in the cardiology IT sector, growth in the overall revenue in the cardiology IT sector, and McKesson's ability to successfully integrate Medcon into McKesson's existing products and services. The most significant of these risks and uncertainties are described in the company's Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission and include, but are not limited to: the resolution or outcome of pending litigation and government investigations relating to the company's previously announced financial restatement ("Restatement"); the effect of the events relating to, or arising out of, the Restatement on the company's ability to attract and retain employees and management; the changing U.S. healthcare environment, including potential changes in private and governmental reimbursement for healthcare products and services, the method by which such products and services are delivered, legislation or regulations governing such products and services, or mandated benefits or changes in manufacturer's pricing or distribution policies; substantial defaults in payment or a material reduction in purchases by large customers; the ability of McKesson Information Solutions to retain existing customers and to attract new customers in light of rapid technological advances, challenges in integrating the company's software products, or the slowing or deferral of demand for such products resulting from the impact of current or pending government regulations; the timing and amounts of the ongoing customer settlement process; and the company's ability to successfully integrate and operate acquired businesses, and manage the risks associated with such businesses, including the acquisition of the business formerly known as HBO & Co. The company assumes no obligation to update information contained in this release.