IRVING, Texas--(BUSINESS WIRE)--McKesson Corporation (NYSE: MCK) will release its third quarter fiscal 2024 financial results after market close on Wednesday, February 7, 2024. The company will host a live webcast of the earnings conference call for investors at 4:30 PM Eastern Time to review its financial results.McKesson management will be participating in the 42nd Annual J.P. Morgan Healthcare Conference on Tuesday, January 9, 2024.The live webcast for each event will be available on McKesson’s Investor ...

Financial Data and Key Metrics Changes - Revenues increased by 10% to $77.2 billion in Q2 2024, with adjusted earnings per diluted share at $6.23, reflecting a 14% increase from the prior year when excluding certain items [5][21] - Gross profit was $3 billion, a decrease of 1%, but increased by 8% when excluding the impact of European business operations and completed divestitures [21] - Operating profit increased by 1% to $1.2 billion, with a 12% increase when excluding COVID-19 related items and losses from McKesson Ventures [22][23] Business Line Data and Key Metrics Changes - The U.S. Pharmaceutical segment saw revenues of $69.8 billion, a 16% year-over-year increase, driven by higher prescription volumes, particularly from GLP-1 medications [25] - Prescription Technology Solutions revenues increased by 12% to $1.1 billion, with operating profit rising by 48% to $209 million, reflecting strong demand for access solutions [27] - Medical-Surgical Solutions revenues were flat at $2.8 billion, with operating profit decreasing by 17% due to lower sales of COVID-19 tests and ancillary supplies [28] Market Data and Key Metrics Changes - The Medical-Surgical segment observed a decline in primary care foot traffic and lower instances of respiratory illness, impacting overall market performance [10][11] - International segment revenues decreased by 44% year-over-year to $3.5 billion, primarily due to divestitures of European businesses [29] Company Strategy and Development Direction - The company is focused on expanding its oncology and biopharma platforms, having added four new practices and hundreds of providers to the U.S. Oncology network [11][12] - Investments in technology and data analytics are prioritized to enhance operational efficiency and customer service [38] - The company aims to leverage its differentiated services and solutions to improve care across various settings, positioning itself for continued growth [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive growth and strategic advancement in fiscal 2024 and beyond, despite challenges in certain segments [17][41] - The anticipated impact of Rite Aid's bankruptcy is not expected to materially affect fiscal 2024 adjusted earnings per diluted share [6][19] - Management noted that the primary care market is moderating, but they remain confident in their position and capabilities to serve customers [64] Other Important Information - The company recorded a pretax GAAP provision for bad debts of $210 million related to Rite Aid's bankruptcy, with an additional provision of $511 million anticipated in Q3 2024 [18][19] - Free cash flow for the quarter was $825 million, with a total of $4.3 billion for the trailing 12 months [31] Q&A Session Summary Question: Focus on RxTS and revenue upside - Management noted stable utilization trends and growth in GLP-1 medications driving revenue, with variability factors including prescription utilization and drug launches [45][46] Question: Margin changes in Prescription Technology Solutions - Management explained that the business should be viewed on an annual basis, with different revenue and margin profiles for various programs impacting second-half expectations [49][50] Question: Rite Aid reserves and collections approach - Management confirmed ongoing distribution services to Rite Aid and outlined the interim agreement with shorter credit terms [55][56] Question: Sustainability of operating expenses - Management emphasized operational efficiency and ongoing investments in capabilities, expecting continued operating margin leverage [58][60] Question: Medical-Surgical segment primary care volumes - Management acknowledged lower primary care volumes due to a less severe illness season and noted that healthcare service consumption needs remain unchanged [63][64] Question: Pharma segment growth drivers - Management highlighted the broad portfolio and efficiency in service delivery as key growth drivers, with oncology investments contributing positively [67] Question: M&A pipeline and focus - Management stated that M&A activities are aligned with growth strategies and financial discipline, with ongoing interest in expanding capabilities [77][78]

McKesson Corporation Second Quarter Fiscal 2024 Earnings Call Cautionary Statements Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward- looking statements may be identified by their use of terminology such as “believes,” “expects,” “anticipates,” “may,” “will,”“should,” “seeks,” “approximately,” “intends,” “projects,” “plans,” “estimates,” “targets,” or the ...

Revenue and Profit - Revenues for the three months ended September 30, 2023, increased to $77.215 billion, up from $70.157 billion in the same period last year[8] - Net income for the three months ended September 30, 2023, was $703 million, compared to $967 million in the same period last year[8] - Diluted earnings per share from continuing operations for the three months ended September 30, 2023, were $4.92, down from $6.46 in the same period last year[6] - Comprehensive income attributable to McKesson Corporation for the six months ended September 30, 2023, was $1.640 billion, compared to $2.114 billion in the same period last year[10] - Net income for the six months ended September 30, 2023, was $1.7 billion, compared to $1.776 billion in the same period in 2022[25] - Income from continuing operations for the three months ended September 30, 2023 was $703 million, and $1.7 billion for the six months ended September 30, 2023[66] - Diluted earnings per common share from continuing operations were $4.92 for the three months ended September 30, 2023, and $11.95 for the six months ended September 30, 2023[68] - Total revenues for the six months ended September 30, 2023, were $151.698 billion, compared to $137.311 billion in the same period in 2022[155] - Revenues increased by 10% to $77.215 billion for the three months ended September 30, 2023, compared to the prior year[184] - Gross profit decreased by 1% to $3.069 billion for the three months ended September 30, 2023, compared to the prior year[184] - Total operating expenses increased by 7% to $2.118 billion for the three months ended September 30, 2023, compared to the prior year[184] - Diluted earnings per common share from continuing operations decreased to $4.92 for the three months ended September 30, 2023, from $6.46 in the prior year[184] Cash Flow and Liquidity - Cash and cash equivalents decreased to $2.524 billion as of September 30, 2023, from $4.678 billion as of March 31, 2023[12] - Net cash used in investing activities for the six months ended September 30, 2023, was $315 million, compared to net cash provided by investing activities of $116 million in the same period last year[24] - Net cash used in operating activities was $87 million for the six months ended September 30, 2023, compared to net cash provided by operating activities of $166 million in the same period in 2022[25] - Cash, cash equivalents, and restricted cash decreased by $2.155 billion for the six months ended September 30, 2023, compared to a decrease of $977 million in the same period in 2022[25] - The company maintains a $4.0 billion commercial paper program, with $2.0 billion borrowed and repaid during the six months ended September 30, 2023[82] - The company has a $4.0 billion five-year senior unsecured credit facility (2022 Credit Facility) with no borrowings outstanding as of September 30, 2023[81] - The fair value of money market funds decreased to $645 million in September 2023 from $1.4 billion in March 2023[109] Stock Repurchases and Dividends - McKesson Corporation repurchased $1.513 billion worth of common stock during the six months ended September 30, 2023[19] - McKesson Corporation declared cash dividends of $1.16 per common share during the six months ended September 30, 2023[19] - The company repurchased $1.505 billion worth of common stock during the six months ended September 30, 2023[25] - The company paid $149 million in dividends during the six months ended September 30, 2023[25] - The company repurchased 2.0 million shares of common stock for $840 million during the three months ended September 30, 2023, at an average price per share of $422.39[139] - The company repurchased 1.8 million shares of common stock for $673 million during the three months ended June 30, 2023, at an average price per share of $379.14[139] - The company's total remaining authorization for repurchases of common stock at September 30, 2023, was $8.1 billion[141] - The company's quarterly dividend was raised from $0.54 to $0.62 per share of common stock in July 2023[136] - The company incurred excise taxes of $8 million and $12 million for the three and six months ended September 30, 2023, respectively, related to share repurchases[139] Acquisitions and Divestitures - The company completed the acquisition of Rx Savings Solutions, LLC for $600 million in cash and up to $275 million in contingent consideration[34] - The company recorded a liability for contingent consideration at its fair value of $92 million as of the acquisition date for Rx Savings Solutions, LLC[35] - The company completed the formation of SCRI Oncology, LLC with HCA Healthcare, Inc., owning a 51% controlling interest and paying $166 million in net cash[41] - The company divested its European businesses, recording gains of $23 million and $35 million for the three and six months ended September 30, 2022, respectively[46] - The company sold its UK retail and distribution businesses for £110 million (approximately $144 million) and divested net assets of $615 million[47] - The company completed the divestitures of the U.K. disposal group in April 2022 and the E.U. disposal group in October 2022[153] Restructuring and Impairment - Restructuring, impairment, and related charges, net were $28 million for the three months ended September 30, 2023, and $80 million for the six months ended September 30, 2023[51] - The company anticipates total restructuring charges of approximately $125 million, with $99 million recorded through September 30, 2023[52] - Corporate expenses, net, included restructuring charges of $46 million for the six months ended September 30, 2023[156] - Restructuring, impairment, and related charges were $28 million for the three months ended September 30, 2023, compared to $30 million in the same period in 2022[194] - The company anticipates total restructuring charges of approximately $125 million, with $99 million recorded through September 30, 2023[196] Taxes - Income tax expense for the three months ended September 30, 2023 was $213 million, with a reported income tax rate of 23.3%[61] - The company recognized a net discrete tax benefit of $147 million during the six months ended September 30, 2023 due to intellectual property repatriation[64] - As of September 30, 2023, the company had $1.4 billion of unrecognized tax benefits, with $1.3 billion potentially reducing income tax expense if recognized[65] - The IRS proposed adjustments to taxable income for fiscal 2018 and 2019, potentially increasing federal income tax liability by $600 million to $700 million[67] - Income tax expense was $213 million for the three months ended September 30, 2023, compared to $271 million in the same period in 2022, with a reported tax rate of 23.3%[200] - The company recorded a net discrete tax benefit of $147 million in the six months ended September 30, 2023, primarily related to the repatriation of intellectual property[201] Debt and Financial Instruments - Total long-term debt was $5.6 billion as of September 30, 2023, with $49 million classified as current portion[75] - The company issued $400 million of 4.90% Notes due July 15, 2028 and $600 million of 5.10% Notes due July 15, 2033 in June 2023[76] - The company repurchased $271 million principal amount of 3.80% Notes due March 15, 2024 at 98.75% of principal plus accrued interest, totaling $268 million[78] - The company uses cross-currency swaps to hedge $1.5 billion CAD of net investments against foreign currency exchange rate fluctuations[91][96] - The company has $1.1 billion EUR and £450 million GBP of cross-currency swaps designated as fair value hedges for foreign currency notes[92] - The company recognized a $9 million gain on debt extinguishments for the six months ended September 30, 2023[80] - Cross-currency swaps designated as net investment hedges increased to $27 million in Q3 2023 from $21 million in Q3 2022[99] - Fixed interest rate swaps designated as cash flow hedges had a notional amount of $450 million in fiscal 2023 and $50 million in Q1 fiscal 2024[103] - Long-term debt carrying value was $5.584 billion in September 2023, with a fair value of $5.268 billion[112] Litigation and Settlements - The company paid $1.5 billion to Settling Governmental Entities as of September 2023 under the opioid settlement agreement[125] - Future payments under the opioid settlement agreement could reach up to $6.3 billion through 2038[125] - The company paid $61 million to Alabama as of September 2023, with additional payments of $113 million expected through 2031[125] - West Virginia subdivisions received $38 million as of September 2023, with additional payments of $114 million expected through 2033[125] - Total litigation liabilities decreased to $6.644 billion in September 2023 from $7.173 billion in March 2023[124] - The company has paid approximately $84 million to Native American tribes for opioid-related claims as of September 30, 2023, with an additional $112 million to be paid through 2027[127] - A minimum of 85% of the total settlement payments must be used by the settling Native American tribes to remediate the opioid epidemic[127] - The company made payments totaling $529 million associated with opioid-related claims during the six months ended September 30, 2023[128] - The company's estimated accrued liability for opioid-related claims of U.S. governmental entities, including Native American tribes, was recorded in "Other accrued liabilities" in the Condensed Consolidated Balance Sheets[127] - The company received $79 million and $197 million for the three and six months ended September 30, 2023, respectively, related to antitrust legal settlements[172] - The company made payments totaling $529 million associated with various settlement agreements for opioid-related claims during the six months ended September 30, 2023[178] Segment Performance - U.S. Pharmaceutical segment revenues increased to $136.926 billion for the six months ended September 30, 2023, up from $117.006 billion in 2022[155] - International segment revenues decreased to $6.943 billion for the six months ended September 30, 2023, down from $12.786 billion in 2022, primarily due to divestitures[155] - RxTS segment operating profit increased to $469 million for the six months ended September 30, 2023, up from $264 million in 2022, driven by fair value adjustment gains[156] - The U.S. Pharmaceutical segment's operating profit included a $210 million provision for bad debts related to Rite Aid's bankruptcy[156] - The International segment's operating loss for the six months ended September 30, 2022, included charges of $237 million related to the E.U. disposal group[156] Bad Debts and Provisions - The company recognized a provision for bad debts of $210 million related to Rite Aid's bankruptcy in October 2023[157] - The company anticipates recognizing an additional provision for bad debts of $511 million in the third quarter of fiscal 2024 due to Rite Aid's bankruptcy[158] - The company recognized a provision for bad debts of $210 million related to the bankruptcy of Rite Aid Corporation[179] - The company expects to recognize a provision for bad debts of $511 million in the third quarter of fiscal 2024 for trade accounts receivable from Rite Aid[180] - Selling, distribution, general, and administrative expenses (SDG&A) increased by 7% to $2,092 million for the three months ended September 30, 2023, including a $210 million provision for bad debts related to Rite Aid's bankruptcy[192] Other Financial Metrics - Total assets as of September 30, 2023, were $66.091 billion, up from $62.320 billion as of March 31, 2023[12] - Total liabilities increased to $66.091 billion as of September 30, 2023, from $62.320 billion as of March 31, 2023[12] - Goodwill balance as of September 30, 2023 was $9.934 billion, with no impairment indicated in fiscal 2024 and 2023 testing[71] - Intangible assets amortization expense was $62 million for the three months ended September 30, 2023, up from $57 million in the same period in 2022[72] - The company's accumulated other comprehensive loss balance was $(887) million as of September 30, 2023[143] - Investments in U.S. growth stage healthcare companies had a carrying value of $222 million in September 2023, down from $237 million in March 2023[111] - Other income, net decreased primarily due to a $142 million gain recognized in July 2022 related to the exit of an equity securities investment[198] - Interest expense increased due to higher interest rates on debt and derivative portfolios, partially offset by a $9 million gain on debt extinguishment in the first quarter of fiscal 2024[199] - Loss from discontinued operations, net of tax, was $6 million for the three months ended September 30, 2022, with no discontinued operations following the divestiture of the E.U. disposal group in October 2022[202] - Net income attributable to noncontrolling interests includes results from third-party equity interests in ClarusONE Sourcing Services LLP, Vantage Oncology Holdings, LLC, and SCRI Oncology, LLC[203]

McKesson Corporation First Quarter Fiscal 2024 Earnings Call Cautionary Statements Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward- looking statements may be identified by their use of terminology such as “believes,” “expects,” “anticipates,” “may,” “will,”“should,” “seeks,” “approximately,” “intends,” “projects,” “plans,” “estimates,” “targets,” or the ...

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