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Core Insights - McKesson reported an 18% increase in revenues to $95.3 billion and a 16% rise in adjusted operating profit for Q3 FY2025, raising its full-year guidance for adjusted EPS to $32.55-$32.95, indicating a year-over-year growth of 19-20% [1][14] Group 1: Business Segments Performance - The U.S. Pharmaceutical segment significantly contributed to growth, driven by stable utilization trends, increased prescription volumes, and strong specialty pharmaceutical distribution, particularly in oncology, with GLP-1 medications generating $10.9 billion in revenue, a 45% increase year-over-year [2] - The Prescription Technology Solutions segment experienced robust growth, with revenues and operating profit rising 14% and 22%, respectively, due to heightened demand for access and affordability solutions [2][11] - The Medical-Surgical Solutions segment faced a 3% revenue decline due to a weaker-than-expected illness season, but operational efficiencies led to a 4% increase in operating profit [3] Group 2: Strategic Initiatives and Growth Drivers - McKesson is strategically expanding its specialty pharmaceutical distribution and investing in biopharma services, with a focus on oncology and specialty care platforms, including the acquisition of PRISM Vision to enhance its position in ophthalmology [9][12][18] - The company is leveraging digital tools and data analytics to improve prescription adherence and streamline prior authorizations, positioning itself for continued double-digit operating profit growth [11][19] - Operational efficiency remains a priority, with cost optimization initiatives aimed at reducing expenses and enhancing profitability through modernized supply chains and AI-driven analytics [20] Group 3: Financial Outlook and Valuation - McKesson's earnings estimate for FY2025 has improved, with EPS projected at $32.74, reflecting a 19.3% year-over-year growth, and sales estimated at $358.91 billion, indicating over 16% improvement compared to FY2024 [14] - The stock is currently trading at a forward P/E of 16.7X, slightly below the industry average of 17.3X, suggesting a favorable valuation [22] Group 4: Market Position and Competitive Landscape - McKesson has outperformed the Medical-Dental Supplies industry and the broader medical sector over the past six months, although it has underperformed the S&P 500 Index [4] - The company’s strategic focus on high-value specialty care markets positions it well against peers like Cardinal Health and Cencora, which have also shown strong growth [4]

Core Viewpoint - McKesson Corporation reported mixed financial results for the third quarter of fiscal 2025, with adjusted earnings per share (EPS) slightly missing estimates, while revenues showed strong year-over-year growth driven by the Pharmaceutical segment [1][2][15]. Revenue Details - Total revenues reached $95.29 billion, missing the Zacks Consensus Estimate by 0.2%, but reflecting a 17.8% increase year-over-year, primarily due to growth in the Pharmaceutical segment, especially specialty products and GLP-1 medications [2][3]. - The U.S. Pharmaceutical segment generated revenues of $87.1 billion, up 19% year-over-year, driven by increased prescription volumes and growth in the oncology platform [4]. - International segment revenues amounted to $3.9 billion, up 6% year-over-year, attributed to higher pharmaceutical distribution volumes in Canada [5]. Segmental Analysis - The U.S. Pharmaceutical and Specialty Solutions segment reported an adjusted operating profit of $944 million, up 14% from the prior year, due to growth in specialty product distribution [5]. - The Medical-Surgical Solutions segment saw revenues of $2.9 billion, down 3% year-over-year, impacted by lower contributions from illness season vaccines [6]. - The Prescription Technology Solutions segment generated revenues of $1.4 billion, up 14% year-over-year, driven by growth in technology services and third-party logistics [7]. Margins - Gross profit for the quarter was $3.34 billion, up 7% year-over-year, representing 3.5% of net revenues, a decline of nearly 40 basis points year-over-year [9]. - Operating income was reported at $1.22 billion, up 90.7% from the previous year, with an operating margin of 1.3%, an increase of almost 50 basis points year-over-year [9]. Financial Update - Cash and cash equivalents totaled $1.13 billion, down from $2.51 billion a year ago, with cumulative net cash used in operating activities amounting to $1.66 billion compared to a net cash provided of $167 million in the prior year [10]. Fiscal 2025 Guidance - McKesson updated its adjusted EPS guidance for fiscal 2025 to a range of $32.55-$32.95, indicating a growth of 19-20% from the prior year, with revenues expected to grow 16-18% [11][12]. - The U.S. Pharmaceutical segment is projected to achieve 18-20% revenue growth, supported by specialty product distribution and a new strategic partnership contributing $32 billion in revenues [12][17]. Strategic Initiatives - The recent acquisition of PRISM Vision is part of McKesson's strategy to expand into retina and ophthalmology, leveraging expertise in specialty care [18]. - Cost optimization initiatives in the Medical-Surgical segment are expected to enhance efficiencies despite challenges from a weaker flu season [18]. Market Performance - McKesson's shares declined by 3.3% in after-hours trading following the earnings report, with a year-to-date loss of 4.5%, compared to the industry growth of 5.2% and the S&P 500 Index gain of 16.6% [3].

McKesson Corporation Third Quarter Fiscal 2025 Earnings Call February 5, 2025 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 nega ...

Financial Data and Key Metrics Changes - Revenue grew 18% to $95.3 billion and adjusted operating profit grew 16% to $1.5 billion [8][36] - Adjusted earnings per diluted share guidance increased to a range of $32.55 to $32.95, representing 19% to 20% year-over-year growth [9][52] - Gross profit was $3.3 billion, an increase of 7%, with operating expenses rising 2% to $1.9 billion [37][38] Business Line Data and Key Metrics Changes - U.S. Pharmaceutical segment revenues increased 19% to $87.1 billion, driven by higher volumes from retail national account customers and specialty product distribution [41] - Prescription Technology Solutions segment revenues increased 14% to $1.4 billion, with operating profit rising 22% to $235 million [43] - Medical Surgical Solutions revenues decreased 3% to $2.9 billion due to lower demand for illness season products [45] Market Data and Key Metrics Changes - The number of flu-like illness cases was lower than the average of the last five non-COVID years, impacting demand for seasonal vaccines and related products [18][45] - International segment revenues increased 6% to $3.9 billion, with operating profit rising 18% driven by higher pharmaceutical distribution volumes in Canada [48] Company Strategy and Development Direction - The company announced the acquisition of a controlling interest in PRISM Vision to enhance its specialty services platform [7][55] - Focus on strengthening distribution capabilities in North America and expanding oncology and biopharma services platforms [20][30] - Continued investment in automation and technology to modernize distribution networks and improve operational efficiencies [31][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of prescription volumes and growth in specialty areas, particularly oncology [82] - The company anticipates ongoing challenges from public policy and market dynamics but remains focused on long-term growth [70][148] - Cost optimization initiatives are expected to deliver $100 million in savings in the second half of fiscal 2025 [47][60] Other Important Information - The company completed the divestiture of the Rexall and Well.ca businesses to focus on strategic areas [31][61] - Cash and cash equivalents at the end of the quarter were $1.1 billion, with negative free cash flow of $2.6 billion due to timing [50][65] Q&A Session Summary Question: Utilization levels and macro trends impact - Management noted stable prescription volume in the pharma segment, with strong growth in specialty and oncology areas [81] Question: Fiscal 2026 guidance and acquisitions - Management affirmed long-term EPS growth rate of 12% to 14%, with acquisitions subject to regulatory review [87][90] Question: Operating expense growth variability - Management highlighted efforts to drive operating leverage and efficiency while investing in key growth areas [96][97] Question: Medical segment market share and strategy - Management emphasized focus on customer base growth rather than market share, with a shift towards more sophisticated medical products [105][106] Question: PRISM distribution and business impact - Management confirmed they are not the current distributor for PRISM but will pick up that business post-acquisition [108] Question: Cost savings recognition and fiscal 2026 headwinds - Management indicated ongoing cost optimization efforts and potential public policy impacts as headwinds for fiscal 2026 [148]

Core Insights - McKesson reported quarterly earnings of $8.03 per share, slightly missing the Zacks Consensus Estimate of $8.04 per share, but showing an increase from $7.74 per share a year ago, resulting in an earnings surprise of -0.12% [1] - The company posted revenues of $95.29 billion for the quarter ended December 2024, which was below the Zacks Consensus Estimate by 0.18%, and an increase from $80.9 billion year-over-year [2] - McKesson's stock has gained approximately 5.9% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] Earnings Outlook - The future performance of McKesson's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $9.67 on revenues of $90.52 billion, and for the current fiscal year, it is $32.72 on revenues of $358.91 billion [7] Industry Context - The Medical - Dental Supplies industry, to which McKesson belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Becton Dickinson, another company in the same industry, is expected to report quarterly earnings of $2.98 per share, reflecting an 11.2% year-over-year increase, with revenues projected at $5.1 billion, up 8.4% from the previous year [9][10]

Financial Performance - Revenues for the three months ended December 31, 2024, increased to $95,294 million, up 17.5% from $80,898 million in the same period of 2023[11] - Gross profit for the nine months ended December 31, 2024, was $9,684 million, representing a 4.8% increase compared to $9,243 million in 2023[11] - Net income attributable to McKesson Corporation for the three months ended December 31, 2024, was $879 million, a 49.2% increase from $589 million in the same period of 2023[11] - Earnings per share (diluted) for the three months ended December 31, 2024, was $6.95, compared to $4.42 for the same period in 2023, reflecting a 57.2% increase[11] - Net income for the nine months ended December 31, 2024, was $2,175 million, a decrease of 6.7% compared to $2,330 million for the same period in 2023[22] - The net income attributable to McKesson Corporation for the nine months ended December 31, 2024, was $2.035 billion, a decrease of 8% from $2.211 billion in the prior year[200] Assets and Liabilities - Total assets as of December 31, 2024, were $71,081 million, an increase from $67,443 million as of March 31, 2024[16] - Current liabilities increased to $58,562 million as of December 31, 2024, compared to $52,357 million as of March 31, 2024[16] - Total McKesson Corporation stockholders' deficit increased to $3,084 million as of December 31, 2024, from $1,971 million as of March 31, 2024[16] - Total liabilities increased significantly, with short-term borrowings rising to $11,395 million in 2024 from $4,770 million in 2023[22] - Total long-term debt as of December 31, 2024, was $4.422 billion, down from $5.579 billion as of March 31, 2024[79] Cash Flow and Dividends - Cash and cash equivalents decreased to $1,131 million as of December 31, 2024, from $4,583 million as of March 31, 2024[16] - Cash dividends declared per common share increased to $2.04 in 2024 from $1.78 in 2023, totaling $263 million in dividends paid[20] - The company reported a net cash used in operating activities of $(1,663) million for the nine months ended December 31, 2024, compared to $167 million provided in 2023[22] - The Company declared cash dividends of $0.71 per common share for the three months ended December 31, 2024[18] Restructuring and Impairment - The Company anticipates total charges of $650 million to $700 million related to enterprise-wide restructuring initiatives aimed at modernizing technology services, with $245 million recorded for the nine months ended December 31, 2024[46] - Restructuring, impairment, and related charges for the nine months ended December 31, 2024 totaled $276 million, compared to $84 million for the same period in 2023[45] - The Company recorded $23 million in net charges for the three months ended December 31, 2024, related to restructuring and impairment[45] - The company incurred asset impairment charges of $83 million in 2024, compared to $28 million in 2023, indicating increased financial strain[22] Share Repurchases - The Company repurchased common stock amounting to $2,878 million in 2024, compared to $2,381 million in 2023[22] - The Company repurchased 1.5 million shares of common stock for $821 million at an average price of $537.48 per share during the three months ended December 31, 2024[152] - As of December 31, 2024, the total remaining authorization for share repurchases was $7.8 billion after a $4.0 billion increase approved in July 2024[156] Tax and Legal Matters - Income tax expense for the three months ended December 31, 2024, was $298 million, with a reported income tax rate of 24.3%[61] - The estimated liability for opioid-related claims was $6.4 billion as of December 31, 2024, with $775 million expected to be paid within the next twelve months[194] - The Company has paid approximately $2.0 billion as part of a settlement agreement related to opioid distribution claims as of December 31, 2024, with potential future payments of up to $5.9 billion through 2038[124] - The Company's estimated total litigation liabilities for opioid-related claims as of December 31, 2024, amount to $6.392 billion, down from $6.778 billion as of March 31, 2024[136] Segment Performance - U.S. Pharmaceutical segment revenues for the three months ended December 31, 2024 were $87,110 million, up from $73,023 million in the prior year, representing a 19% increase[174] - Prescription Technology Solutions segment revenues for the three months ended December 31, 2024 were $1,371 million, an increase from $1,205 million in the prior year, reflecting a 14% growth[174] - Medical-Surgical Solutions segment revenues for the three months ended December 31, 2024 were $2,949 million, slightly down from $3,031 million in the prior year[174] - International segment revenues for the three months ended December 31, 2024 were $3,860 million, compared to $3,639 million in the prior year, marking a 6% increase[174] Investments and Acquisitions - The Company announced an agreement to acquire an 80% interest in PRISM Vision Holdings for approximately $850 million, which will be reported within the U.S. Pharmaceutical segment[44] - McKesson entered into an agreement to acquire a 70% controlling interest in Core Ventures for approximately $2.49 billion, subject to regulatory clearance[200] Other Financial Metrics - The Company recorded a charge of $666 million for the nine months ended December 31, 2024 related to the remeasurement of the Canadian retail disposal group[187] - The Company completed the sale of its Canadian retail disposal group for an adjusted purchase price of $9 million in cash and a $120 million note[187] - McKesson's gross profit margin for the nine months ended December 31, 2024, was 3.61%, down from 3.97% in the prior year[200]

Core Insights - McKesson reported mixed financial results for Q3 of fiscal 2025, beating earnings expectations but slightly missing revenue targets [1][2] - The company achieved an adjusted EPS of $8.03, surpassing the projected $8.01, while revenue was $95.3 billion, below the estimated $96 billion [1][3] Financial Performance - Operating profit surged by 91% year-over-year, reaching $1.29 billion, driven by enhanced efficiency and cost controls [2][6] - Revenue for the U.S. Pharmaceutical segment was $87.1 billion, reflecting strong growth due to increased prescription volumes [6] - The Prescription Technology Solutions segment saw a 14% revenue increase to $1.4 billion, attributed to growth in third-party logistics and technology services [7] - The Medical-Surgical Solutions segment experienced a 3% revenue decline to $2.9 billion, linked to reduced seasonal vaccine and testing activities [8] - Net income rose by 49% year-over-year to $879 million [3] Business Overview - McKesson is a key player in the healthcare supply chain, focusing on the distribution of medical supplies and pharmaceutical products [4] - The company has been consolidating its operations by exiting some European markets to strengthen its core business in the U.S. and Canada [5] Strategic Developments - McKesson secured a controlling interest in PRISM Vision Holdings, expanding its specialty care offerings [9] - The company divested its Canadian retail businesses, including Rexall, to focus on core growth markets [9] - Despite strategic efforts, McKesson reported negative free cash flow of $2.2 billion in Q3 due to investments and share buybacks [9] Future Outlook - McKesson raised its fiscal 2025 adjusted EPS guidance to a range of $32.55 to $32.95, indicating confidence in its strategic initiatives [10] - The anticipated growth rate for the adjusted EPS is projected at 19% to 20% [10] - The company is expected to navigate competitive and regulatory pressures, with notable competitors like Cardinal Health posing challenges [11]

Exhibit 99.1 McKESSON CORPORATION REPORTS FISCAL 2025 THIRD QUARTER RESULTS AND RAISES FULL YEAR ADJUSTED EPS GUIDANCE IRVING, Texas, February 5, 2025 - McKesson Corporation (NYSE:MCK) today announced results for the third quarter ended December 31, 2024. Third Quarter Highlights: Fiscal 2025 Outlook: "McKesson reported strong third quarter operational results with broad-based Revenue growth of 18% and Adjusted Operating Profit growth of 16%. Our performance reflects the strength and momentum across the ent ...

McKesson Corporation (MCK) recently announced that it has signed a definitive agreement to acquire a controlling interest in PRISM Vision Holdings, LLC (PRISM Vision), a premier provider of general ophthalmology and retina management services, from Quad-C.McKesson is likely to purchase an 80% stake in  PRISM Vision Holdings for approximately $850 million, while physicians will continue to retain a 20% interest.Likely Trend of MCK Stock Following the NewsFollowing the announcement, shares of the company clos ...