McKesson(US:MCK)2022-11-02 00:40Financial Data and Key Metrics Changes - McKesson reported total revenues of $70.2 billion for Q2 2023, with adjusted earnings per diluted share of $6.06, reflecting an 11% increase from the prior year when excluding COVID-19 related items [4][23] - The company raised its fiscal 2023 adjusted earnings guidance from a range of $23.95 to $24.65 to an updated range of $24.45 to $24.95 [4][39] - Gross profit for the quarter was $3.1 billion, a decrease of 7%, but increased by 5% when excluding the impact of European divestitures [29] Business Line Data and Key Metrics Changes - U.S. Pharmaceutical segment revenues increased by 12% year-over-year to $60.1 billion, with operating profit growing by 3% to $756 million [31] - Prescription Technology Solutions segment revenues were $1 billion, up 9% year-over-year, while operating profit decreased by 2% to $141 million due to increased operating expenses [32] - Medical Surgical Solutions revenues decreased by 9% to $2.8 billion, with operating profit down 4% to $307 million, primarily due to lower sales of COVID-19 tests [33] Market Data and Key Metrics Changes - The international segment reported revenues of $6.2 billion, a decrease of 16%, reflecting the impact of divestitures in the UK and Austria [34] - The company noted stable prescription volumes and patient utilization trends, with a general expectation of resilience in healthcare demand despite macroeconomic fluctuations [20][21] Company Strategy and Development Direction - McKesson is focusing on strengthening its competitive advantage in oncology and biopharma services through internal investments and acquisitions, such as the RX Savings Solutions acquisition [5][15] - The company is committed to streamlining its portfolio, having exited 11 of 12 European countries, with ongoing assessments for strategic alignment [12][24] - The oncology ecosystem is a strategic growth area, with a joint venture formed with HCA's Sarah Cannon Research Institute to enhance cancer care access [17][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's market position and growth trajectory, citing solid performance in the first half of fiscal 2023 [21][22] - The macroeconomic environment remains fluid, but the company has managed cost inflation and supply chain disruptions effectively [20][21] - The outlook for fiscal 2023 anticipates revenue growth of 3% to 7% and operating profit growth of 4% decline to 2% [38] Other Important Information - The company is committed to sustainability and ESG initiatives, with a focus on improving healthcare access and advancing health equity [19][20] - McKesson's cash position at the end of the quarter was $2.9 billion, with plans for significant share repurchases [36][46] Q&A Session Summary Question: Strength in pharma operating profit and macro trends - Management characterized overall market trends as stable, with prescription transaction volumes in line with expectations, slightly ahead of pre-COVID levels [50][51] Question: Prescription Technology Solutions segment hiring - Hiring is recurring annually for patient eligibility verification, and while there were challenges, management expects to work through them in upcoming quarters [56] Question: Impact of flu season on business - Management anticipates a more typical flu season, which could positively impact vaccine distribution and related sales [61] Question: Prescription volume trends - July was noted as an anomaly with lower prescription volumes, but overall, the second quarter showed an average increase of about 4.5% year-over-year [63] Question: Medical Surgical Solutions guidance - The decline in operating profit guidance is modest, with expectations for growth excluding COVID-related items remaining strong [66]