Under the negotiated proposed settlement agreement and subject to final state territorial and political subdivision participation, McKesson will pay up to $7.9 billion over a period of 18 years.
Today, we're reporting adjusted earnings per diluted share of $5.56 ahead of our original expectations, resulting from the strength across our businesses and our roles in the COVID-19 response efforts across the geographies in which we operate.
Through July, our US Pharmaceutical business has successfully distributed over 185 million Moderna and J&J COVID-19 vaccines to administration sites across the United States, and our medical business has now assembled enough kits to support the administration of more than 785 million doses for all vaccine types.
Through July, we successfully prepared over 65 million COVID-19 vaccines for shipment abroad.
Through July, we've distributed over 45 million vaccines to administration sites in select markets across these geographies.
Based on our first quarter results, our evolving roles in the COVID-19 response efforts and our confidence in our outlook for the remainder of our fiscal 2022, we are raising our adjusted earnings per diluted share guidance to $19.80 to $20.40 from a previous range of $18.85 to $19.45.
McKesson earned a top ranking score of 100 on the 2021 Disability Equality Index.
Throughout our enterprise, there's an initiative we called Spend Smart, which helped us achieve our three-year cost reduction target of $400 million to $500 million of annual cost savings by the end of our fiscal 2021.
Starting with oncology, an ecosystem that McKesson has strategically built over a period of nearly 15 years, beginning with our acquisition of oncology therapeutics network all the way back in 2007, which added at that time, core specialty distribution capabilities.
10 years ago, we deepened the breadth and the depth of our offering with the acquisition of US Oncology Network, which gave us practice management, site management for research and the iKnowMed EHR, which is one of the foundational pieces of Ontada.
Fast-forward to today, and we're now supporting over 14,000 specialty physicians through distribution and GPO services.
We're also the leading distributor in community oncology space and have over 1,400 physicians in the US oncology network spread over approximately 600 sites of care in the US.
Our Prescription Technology Solutions business invests in innovation and aims to provide access, adherence and affordability solutions for over 500 brands across nearly every therapeutic area.
Our connectivity to over 50,000 pharmacies, 750,000 providers and 75% of EHRs in the US helps enable over five billion prescription -- $5 billion of prescription savings for patients each year.
The purchase price for the transaction was approximately US$1.5 billion.
The assets involved in this transaction contributed approximately $12 billion in revenue and $75 million in adjusted operating profit in fiscal 2021.
We will remeasure the net assets to the lower carrying amount or fair value, less cost to sell, and we estimate that this will result in a GAAP-only charge of between $500 million to $700 million in our second quarter of fiscal 2022.
As a result of the held-for-sale accounting, we would guide to approximately $0.26 adjusted earnings accretion in fiscal 2022.
In the quarter, we recorded $155 million of pre-tax inventory charges within our Medical Surgical Solutions segment for inventory which we no longer intend to sell and will instead direct the previously mentioned charitable organizations.
These actions will result in the realization of annual operating expense savings of approximately $60 million to $80 million when fully implemented.
In the June quarter, we reported approximately $95 million of charges associated with this initiative.
First quarter adjusted earnings per diluted share was $5.56, an increase of 101% compared to the prior year.
Consolidated revenues of $62.7 billion increased 13% to the prior year, driven by growth in the US Pharmaceutical segment, largely due to higher volumes from retail national account customers and price increases on branded and specialty pharmaceuticals, which is partially offset by branded to generic conversions.
Adjusted gross profit was $3.1 billion for the quarter, up 19% compared to the prior year.
Adjusted operating expenses in the quarter increased 6% year-over-year, led by higher operating expenses to support growth in our core businesses and strategic investments, partially offset by the contribution of our German wholesale business to the joint venture with Walgreens Boots Alliance.
Adjusted operating profit was $1.1 billion for the quarter, an increase of 55% compared to the prior year, which reflects double-digit growth in each segment.
Interest expense was $49 million in the quarter, a decline of 18% compared to the prior year, driven by the retirement of approximately $1 billion of long-term debt in fiscal 2021.
Our adjusted tax rate was 11.3% for the quarter due to discrete tax items that were recorded during the quarter.
Our full year adjusted effective tax rate guidance of 18% to 19% remains unchanged.
And our first quarter diluted weighted average shares were 158 million, a decrease of 3% year-over-year driven by $1 billion of shares repurchased in the first quarter.
Moving now to our first quarter segment results, which can be found on slides eight through 12, and I'll start with US Pharmaceutical.
Revenues were $50 billion, an increase of 12% and driven by higher volumes from retail national account customers and price increases on branded and specialty pharmaceuticals, partially offset by branded to generic conversions.
Adjusted operating profit in the quarter increased 16% to $682 million, driven by the contribution from COVID-19 vaccine distribution and growth in specialty products distribution, to our providers and healthcare systems, which was partially offset by higher operating costs in support of the company's oncology growth initiative.
Second, our technology-based platforms, like Relay Health support, 19 billion clinical and financial transactions annually, from claims routing in the growing discount card market to alerts and edits to make the practice of pharmacy clinically safer and administratively more efficient.
In the June quarter, revenues were $881 million, an increase of 34%.
And adjusted operating profit increased 62% to $139 million, driven by higher volumes of technology and service offerings to support biopharma customers, organic growth from access and adherence solutions and recovery of prescription volumes on the COVID-19 pandemic.
Revenues were $2.5 billion in the quarter, up 40%, driven by improvements in primary care patient visits and increased sales of COVID-19 tests.
The contribution for our contract with US government to prepare and distribute ancillary supplies, related to the COVID-19 vaccine provided a benefit of approximately $0.25 in the quarter and were above our original expectations.
For the quarter, adjusted operating profit increased 107% to $257 million, driven by improvements in primary care patient visits and the contribution from kitting and distribution of ancillary supplies for the US government's COVID-19 vaccine program.
Revenues in the quarter were $9.2 billion, an increase of 8% year-over-year.
Excluding the impact from the divestiture of our German wholesale business, Segment revenue increased 28% year-over-year and was up 14% on an FX-adjusted basis.
First quarter adjusted operating profit increased 133% year-over-year to $170 million.
On an FX-adjusted basis, adjusted operating profit increased 107% to $151 million, led by the recovery of pharmaceutical distribution and retail pharmacy volumes from the COVID-19 pandemic, and distribution of COVID-19 vaccines and test kits in Europe and Canada.
For the quarter, adjusted corporate expenses were $154 million, a decrease of 7% year-over-year, driven by decreased opioid litigation expenses.
We reported opioid-related litigation expenses of $35 million for the first quarter.
We continue to estimate fiscal 2022 opioid-related litigation expenses to approximate $155 million.
We ended the quarter with a cash balance of $2.4 billion.
During the quarter, we had negative free cash flow of $1.8 billion.
We made $159 million of capital expenditures in the quarter, which includes investments in technology, data and analytics to support our strategic initiatives on the -- of oncology and biopharma services.
As our business performed at a very high level, we were also able to return $1.1 billion of cash to our shareholders in the June quarter.
This included $1 billion of share repurchases, pursuant to an accelerated share repurchase program, which resulted in an initial delivery of 4.3 million shares in the quarter.
Additionally, we paid $69 million in dividends.
We have $1.8 billion remaining on our share repurchase authorization, and we're updating our guidance for diluted weighted shares outstanding to range from $154 million to $156 million for fiscal 2022, which incorporates plans to repurchase an additional $1 billion of stock over the remainder of the fiscal year.
For fiscal 2022, our updated guidance for adjusted earnings per diluted share is a range of $19.80 to $20.40, up from our previous range of $18.85 to $19.45, approximately equally split between our first and second half of the fiscal year.
Our updated outlook for adjusted earnings per diluted share reflects 15% to 18.5% growth from the prior year, and our guidance assumes core growth across all of our segments.
In the US Pharmaceutical segment, we now expect revenue to increase 5% to 8% and adjusted operating profit to deliver 4.5% to 7.5% growth over the prior year.
COVID-19 vaccine contribution contributed approximately $0.30 in the first quarter of fiscal 2022.
We are updating our full year outlook to approximately $0.45 to $0.55.
The $0.45 to $0.55 range reflects anticipated contribution of earnings for the fair value of services performed as the US government's centralized distributor of COVID-19 vaccines, including work preparing vaccines for international missions.
These investments will represent an approximate $0.20 headwind in fiscal 2022.
Normalizing for the COVID-19 vaccine distribution and our ongoing growth investments, we continue to expect approximately 5% to 8% core adjusted operating profit growth.
In our Prescription Technology Solutions segment, we see revenue growth of 20% to 25% and adjusted operating profit growth of 17% to 22%.
We continue to partner with the US government under our contract for the kitting and distribution of ancillary supplies, and are updating our outlook to $0.35 to $0.45 of contribution in the segment related to kitting and distribution.
Our revenue outlook assumes a 3% decline to 3% growth, and adjusted operating profit to deliver 6% to 12% growth over the prior year.
We continue to expect year-over-year core adjusted operating profit growth of approximately 10% to 16%.
Finally, in the International segment, our revenue guidance was a 1% decline to 4% growth as compared to the prior year.
For adjusted operating profit, our guidance has growth in the segment of 26% to 30% due to the previously mentioned benefit from the discontinuation of depreciation and amortization, which followed the announcement of our agreement to sell certain European assets.
Our guidance assumes 4% to 7% revenue growth and 7% to 10% adjusted operating profit growth compared to fiscal 2021.
And we continue to expect corporate expenses in the range of $670 million to $720 million.
This successful tender offer resulted in the early retirement of $922 million of our outstanding debt.
Additionally, we announced the early retirement of a 600 million note for a total reduction in debt of approximately $1.6 billion.
And as a result of these actions, we're updating our interest expense guidance for fiscal 2022 to $180 million to $200 million.
We're also reiterating our free cash flow guidance of approximately $3.5 billion to $3.9 billion, which is net of property acquisitions and capitalized software expenses.
The remaining put rate options resulted in payments of approximately $1 billion in the quarter, which was generally in line with our expectations.
As a result of this activity, McKesson holds approximately 95% of McKesson Europe's outstanding common shares, and we anticipate income attributable to non-controlling interest in the range of $175 million to $195 million in fiscal 2022.
Our commitment to return cash to shareholders through dividends and share repurchases was recently highlighted by our Board's approval of a 12% increase to our quarterly dividend to $0.47 per share.
And our fiscal 2022 guidance continues to include share repurchases of approximately $2 billion for the full year.

Summary:
First quarter adjusted earnings per diluted share was $5.56, an increase of 101% compared to the prior year.
Consolidated revenues of $62.7 billion increased 13% to the prior year, driven by growth in the US Pharmaceutical segment, largely due to higher volumes from retail national account customers and price increases on branded and specialty pharmaceuticals, which is partially offset by branded to generic conversions.
Our commitment to return cash to shareholders through dividends and share repurchases was recently highlighted by our Board's approval of a 12% increase to our quarterly dividend to $0.47 per share.