Mckesson Corporation · NYSE:MCK
Mckesson — Q2 FY2020 Earnings Presentation
25 slides from Mckesson's earnings presentation, Oct 30, 2019
Slide 1: Q2 Fiscal 2020 Financial Results
McKesson Corporation Q2 Fiscal 2020 Financial Results October 30, 2019
Slide 2: Cautionary Statements
Cautionary Statements Except for historical information contained in this press release, matters discussed may constitute “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, that involve risks and uncert
Slide 3: Company Update
Company Update Q2 In Line with Expectations; Reaffirmed Full-Year Guidance Company Updates Business Summary • On October 21, 2019, the company announced an • Revenue growth of 9%1 agreement in principle to settle all claims against the company in the first track of the multi-district • Adjusted Earn
Slide 4: Condensed Consolidated Statement of Earnings
Condensed Consolidated Statement of Earnings Q2 and YTD Fiscal 2020 Results Adjusted Results Q2 YoY YTD Q2 YoY ($ in millions, except per share amounts) FY 2020 Change FY 2020 Change Revenues $57,616 9% $113,344 7% Gross Profit $2,832 2% $5,601 2% Operating Expenses ($1,978) 5% ($3,977) 3% Income fr
Slide 5: Opioid-Related Costs
Opioid-Related Costs Results Q2 Q2 YTD Q2 Full Year ($ in millions) FY 2020 FY 2019 FY 2020 FY 2019 Opioid-Related Costs Litigation Reserves Adjustment $82 - $82 $37 Legal Fees and Other $36 $34 $72 $114 Total Expense $118 $34 $154 $151 Litigation Reserves Adjustment • McKesson recorded a pre-tax ch
Slide 6: U.S. Pharmaceutical and Specialty Solutions
U.S. Pharmaceutical and Specialty Solutions Q2 and YTD Fiscal 2020 Results Adjusted Results Q2 YoY YTD Q2 YoY ($ in millions) FY 2020 Change FY 2020 Change U.S. Pharmaceutical and Specialty Solutions Revenues $45,979 10% $90,144 9% Operating Profit $641 1% $1,241 6% Operating Margin 1.39% (14)bps 1.
Slide 7: European Pharmaceutical Solutions
European Pharmaceutical Solutions Q2 and YTD Fiscal 2020 Results Adjusted Results Q2 YoY YTD Q2 YoY ($ in millions) FY 2020 Change FY 2020 Change European Pharmaceutical Solutions Revenues $6,598 (1)% $13,308 (2)% Operating Profit $41 (23)% $76 (40)% Operating Margin 0.62% (18)bps 0.57% (37)bps • Q2
Slide 8: Medical-Surgical Solutions
Medical-Surgical Solutions Q2 and YTD Fiscal 2020 Results Adjusted Results Q2 YoY YTD Q2 YoY ($ in millions) FY 2020 Change FY 2020 Change Medical-Surgical Solutions Revenues $2,056 6% $3,959 8% Operating Profit $166 20% $325 24% Operating Margin 8.07% 99bps 8.21% 101bps • Q2 revenue increase primar
Slide 9: Other & Corporate
Other & Corporate Q2 and YTD Fiscal 2020 Results Adjusted Results Q2 YoY YTD Q2 YoY ($ in millions) FY 2020 Change FY 2020 Change Other1 Revenues $2,983 4% $5,933 1% Operating Profit $221 (26)% $497 (3)% Operating Margin NM NM NM NM Corporate Operating Loss ($146) 2% ($283) 19% • Q2 operating profit
Slide 10: Cash
Cash ($ in millions) YTD Cash Balance Walk* Cash Dynamics • Free cash flow of $(343M) Balance at March 31, 2019 $ 2,981 Operating Cash Flow (159) • Returned $1.6 billion of cash to Capital Expenditures (184) shareholders year-to-date Free Cash Flow (343) Acquisitions • Repurchased of $1.4 billion of
Slide 11: FY20 Outlook
FY20 Outlook On the following slides, McKesson presents an overview of its fiscal 2020 Outlook assumptions. These assumptions consist of certain non-GAAP measures. As outlined in the company’s October 30, 2019 press release, McKesson does not provide forward-looking guidance on a GAAP basis as the c
Slide 12: Fiscal 2020 Adjusted Earnings Outlook
Fiscal 2020 Adjusted Earnings Outlook Fiscal 2019 Fiscal 2020 Outlook Actual Mid to high-single digit percent growth Revenues (Previously low to mid-single digit $214.3 billion percent growth) Income from Continuing Operations before Flat to low-single digit percent decline $3.8 billion Interest Exp
Slide 13: Fiscal 2020 Segment Adjusted Earnings Outlook
Fiscal 2020 Segment Adjusted Earnings Outlook Year-over-Year Percent Change Revenues Operating Profit U.S. Pharmaceutical and High-single digit growth Low to mid-single digit growth Specialty Solutions (Previously low to mid-single digit growth) Low single-digit growth European Pharmaceutical Flat t
Slide 14: Fiscal 2020 Adjusted Earnings Assumptions
Fiscal 2020 Adjusted Earnings Assumptions ($ and shares in millions) FY20 Outlook $695 - $745 Corporate Expenses (Previously low end of $725 - $775) Adjusted Equity Earnings from Investment in $250 - $270 Change Healthcare Interest Expense $245 - $265 Effective Tax Rate 18 -19% Net Income Attributab
Slide 15: Appendix
MCKESSON Appendix
Slide 16: Reconciliation of GAAP Amounts to Free Cash Flow
Reconciliation of GAAP Amounts to Free Cash Flow ($ in millions) Q2 FY 20 Q2 FY 19 YoY Change Major GAAP cash flow categories: Operating cash flow $ (159) $ 318 $ (477) Investing cash flow $ (285) $ (983) $ 698 Financing cash flow $ (1,203) $ 198 $ (1,401) Free cash flow (non-GAAP measure): Operatin
Slide 17: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q2 Fiscal 2020 Schedule 2A McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions, except per share amounts) note: Q1 will have small #'s in NGAAP Adjustments due to manual rounding adjustments in the NGA
Slide 18: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Schedule 2A Q2 Fiscal 2019 Amortization of Acquisition- Transaction- Related Quarter Ended September 30, 2018 LIFO Inventory- Gains from Restructuring, Impairment and Other Adjusted (Continued) As Reported Related Expenses and Related Antitrust Legal Related Adjustmen
Slide 19: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation YTD Fiscal 2020 Schedule 2B McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions, except per share amounts) Change Six Months Ended September 30, 2019 Vs. Prior Period Amortization Transaction- Restruct
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Schedule 2B YTD Fiscal 2019 Amortization Transaction- Six Months Ended September 30, 2018 Restructuring, (Continued) of Acquisition- Related LIFO Inventory- Gains from Impairment and Other Adjusted As Reported Related Expenses and Related Antitrust Legal Related Adjus
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q2 Fiscal 2020 and Q2 Fiscal 2019 Schedule 3A McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions) Quarter Ended September 30, 2019 Quarter Ended September 30, 2018 GAAP Non-GAAP Change Adjuste
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation YTD Fiscal 2020 and YTD Fiscal 2019 Schedule 3B McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions) Six Months Ended September 30, 2019 Six Months Ended September 30, 2018 GAAP Non-GAAP Change
Slide 23: Financial Statement Notes
Financial Statement Notes McKESSON CORPORATION FINANCIAL STATEMENT NOTES (1) Operating expenses for the first half of fiscal 2019 include a gain from an escrow settlement of $97 million (pre-tax and after-tax) representing certain indemnity and other claims related to our third quarter 2017 acquisit
Slide 24: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information 1 of 2 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION In an effort to provide investors with additional information regarding the Company's financial results as determined by generally accepted accounting principles ("GAAP"), McKesson Corporation (the "Compan
Slide 25: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information 2 of 2 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) • FX-Adjusted (Non-GAAP): McKesson also presents its financial results on an FX-Adjusted basis. To present our financial results on an FX-Adjusted basis, we convert current year period results