McKesson(MCK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a full year consolidated revenue growth of 16%, reaching a record level of $359 billion [6][42] - Adjusted earnings per diluted share was$ 33.05, exceeding expectations with a year-over-year growth of 20% [6][45] - Fourth quarter earnings per diluted share increased 64% to $10.12, driven by a lower effective tax rate and strong operational growth [35][36] Business Line Data and Key Metrics Changes - The U.S. Pharmaceutical segment revenues increased 21% to$ 83.2 billion, driven by increased prescription volumes and growth in specialty products [36] - The Prescription Technology Solutions segment saw revenues increase 13% to $1.3 billion, with operating profit rising 34% to$ 285 million [37] - The Medical Surgical Solutions segment revenues increased 1% to $2.9 billion, with operating profit up 15% to$ 285 million [39] Market Data and Key Metrics Changes - Revenues from GLP-1 medications in the fourth quarter were $10.9 billion, a 46% increase compared to the prior year [36] - The Canadian business, part of the international segment, experienced a 2% revenue decrease due to divestitures, but operating profit increased 9% [40][60] Company Strategy and Development Direction - The company is focusing on strategic acquisitions in oncology and biopharma services, including the acquisition of Prism Vision and Core Ventures [7][12] - A decision was announced to separate the Medical Surgical segment into an independent company to enhance strategic focus and capital deployment [20][29] - The company aims to leverage technology, automation, and AI to improve operational efficiencies and enhance financial profiles [9][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue momentum and deliver strong results in fiscal 2026, anticipating revenue growth of 11% to 15% [46][66] - The company is closely monitoring the macroeconomic environment and potential impacts from policy changes, but remains optimistic about the healthcare industry's resilience [26][100] - Management emphasized the importance of community-based care and its role in managing healthcare costs and accessibility [72] Other Important Information - The company returned$ 3.5 billion to shareholders, including $3.1 billion through share repurchases [45] - Free cash flow for the fiscal year was$ 5.2 billion, driven by strong operational results [45][41] Q&A Session Summary Question: Impact of Medicare Part B on ASPs - Management indicated that there are currently no confirmed changes and emphasized the importance of community-based care in managing costs [69][72] Question: Tariff Impacts on Business - Management is monitoring the tariff landscape but does not anticipate a material impact on fiscal 2026 guidance [78][85] Question: Urgency in Capital Deployment for Biopharma Services - Management stated that the urgency for capital deployment remains consistent, driven by strategic alignment and financial discipline [90][93] Question: Long-term Pharma Growth Rate Guidance - Management noted that the increase in guidance reflects a stable environment for prescription utilization and successful capital deployment [97][101] Question: SG&A Efficiency Improvements - Management acknowledged a substantial decline in SG&A expenses year-over-year, attributing it to operational efficiencies [105]