SAN FRANCISCO--(BUSINESS WIRE)--Dec. 21, 2000--McKessonHBOC today expanded its long-term relationship with Costco with the signing of a 4-year renewal agreement. In addition to serving as the primary supplier for Costco retail pharmacies, the agreement includes supplying the online pharmacy, www.costco.com. The new agreement is expected to generate over $2.2 billion in total revenue over the four-year term, including $600 million in incremental revenue.

McKessonHBOC will also provide automation technology for Costco's retail pharmacies. BakerAPS, a business unit of McKessonHBOC, will initially install its Pharmacy Productivity system in two high-volume Costco retail pharmacies. Baker Productivity Stations utilize BakerAPS technology, software and automation to create a highly accurate, efficient and effective pharmacy workstation environment. At full capacity, Baker's Productivity Stations assist in accurately processing as many as 480 prescriptions per eight-hour shift.

"The expansion of the existing supply agreement with McKessonHBOC reflects the rapid growth of Costco's pharmacies and the incremental volume we expect to generate through 80 new stores and our new online pharmacy, www.costco.com, which was launched last year," said Costco senior vice president of pharmacy Charles Burnett. "We are also extremely pleased to expand the scope of our relationship to include McKessonHBOC's automated-pharmacy systems in our stores. Through the enhancement of our pharmacies, Costco is well-positioned for future growth."

Paul Julian, president, McKessonHBOC Supply Management Business, said, "This expanded agreement with Costco demonstrates that retail customers clearly benefit from the synergies that exist between our supply management and automation technology businesses. In addition to being a highly-valued customer, Costco is a fast-paced growth company. We are particularly excited about the important role www.costco.com plays in Costco's business and how it will help shape future opportunities across McKessonHBOC's businesses."

Costco Corporation, based in Issaquah, Washington, is a membership warehouse company. With more than 14 years of experience in pharmacy operations, Costco is among the top 10 retail pharmacy operators in the United States and currently operates more than 230 stores in 33 states and stores in eight foreign countries.

McKesson HBOC, Inc., a Fortune 40 corporation, is the world's largest supply management and healthcare information technology company. More information about McKesson HBOC, Inc. is available at www.mckhboc.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 involves 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," "may," "should," "intends," "plans," "estimates," "anticipates" and similar words. 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 the Company's Information Technology Business 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; and the Company's ability to successfully integrate and operate acquired businesses, and manage the risks associated with such businesses, including the acquisition that created McKessonHBOC. The Company assumes no obligation to update information contained in this release.

CONTACT:
McKesson HBOC, Inc.
Larry Kurtz, 415/983-8418 (Investors)
Patrice Smith, 415/983-9262 (Media)