Mckesson Corporation · NYSE:MCK
Mckesson — Q1 FY2019 Earnings Presentation
25 slides from Mckesson's earnings presentation, Jul 26, 2018
Slide 1: Q1 Fiscal 2019 Financial Performance
McKesson Corporation Q1 Fiscal 2019 Financial Performance Financial Results and Company Highlights July 26, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information in this presentation is not historical in nature and may constitute forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the
Slide 3: Opening Remarks
Opening Remarks John Hammergren Chairman and Chief Executive Officer
Slide 4: Q1 Fiscal 2019 Highlights
Q1 Fiscal 2019 Highlights Quarter In Line With Expectations; Reaffirming Full-Year Guidance Company Updates Business Summary • New segment reporting effective Q1 FY19, • Revenue growth of 2% in constant currency improving transparency • Adjusted EPS of $2.90, reflecting a lower tax rate • Launched m
Slide 5: Financial Overview
Financial Overview Britt Vitalone Executive Vice President and Chief Financial Officer
Slide 6: GAAP to Adjusted Earnings Per Diluted Share Reconciliation
Q1 Fiscal 2019 GAAP to Adjusted Earnings Per Diluted Share Reconciliation* GAAP Loss Per Diluted Share ($0.69) Adjustments Amortization of acquisition-related intangibles 0.74 Acquisition-related expenses and adjustments 0.22 LIFO inventory-related adjustments (0.07) Gains from antitrust legal settl
Slide 7: Impairment Charge
Q1 Fiscal 2019 Impairment Charge • The company recognized a non-cash after-tax goodwill impairment charge of $570 million in McKesson’s European Pharmaceutical Solutions segment • Charges primarily triggered by recently announced U.K. government reimbursement reductions, as well as new segment repor
Slide 8: Condensed Consolidated Statement of Earnings
Condensed Consolidated Statement of Earnings Q1 Fiscal 2019 Adjusted Results* Q1 YoY Constant YoY ($ in millions, except per share amounts) FY 2019 Change Currency Change Revenues $52,607 3% $52,009 2% Gross Profit $2,724 5% $2,657 3% Operating Expense ($1,972) 9% ($1,917) 6% Income from Operations
Slide 9: Segment Results: U.S. Pharmaceutical and Specialty Solutions
Segment Results: U.S. Pharmaceutical and Specialty Solutions Q1 Fiscal 2019 Adjusted Results* Q1 YoY Constant YoY ($ in millions) FY 2019 Change Currency Change U.S. Pharmaceutical and Specialty Solutions Revenues $40,977 2% NM NM Operating Profit $540 2% NM NM Operating Margin 1.32% 1bp NM NM *See
Slide 10: Segment Results: European Pharmaceutical Solutions
Segment Results: European Pharmaceutical Solutions Q1 Fiscal 2019 Adjusted Results* Q1 YoY Constant YoY ($ in millions) FY 2019 Change Currency Change European Pharmaceutical Solutions Revenues $6,935 9% $6,448 1% Operating Profit $74 (12)% $69 (18)% Operating Margin 1.07% (25)bps 1.07% (25)bps *See
Slide 11: Segment Results: Medical-Surgical Solutions
Segment Results: Medical-Surgical Solutions Q1 Fiscal 2019 Adjusted Results* Q1 YoY Constant YoY ($ in millions) FY 2019 Change Currency Change Medical-Surgical Solutions Revenues $1,703 11% NM NM Operating Profit $125 - NM NM Operating Margin 7.34% (81)bps NM NM *See Tables in the Appendix for GAAP
Slide 12: Segment Results: Other & Corporate
Segment Results: Other & Corporate Q1 Fiscal 2019 Adjusted Results* Q1 YoY Constant YoY ($ in millions) FY 2019 Change Currency Change Other Revenues $2,992 5% $2,881 1% Operating Profit $213 (8)% $204 (12)% Corporate Operating Loss ($95) (15)% ($94) (16)% *See Tables in the Appendix for GAAP to Non
Slide 13: Cash
Cash Cash Balance Walk* Cash Dynamics o Working capital: ($ in millions) o Days sales outstanding was flat at 26 days Balance at March 31, 2018 $ 2,672 Other Operating Cash Flows 435 o Days sales in inventory increased 1 day YoY to Working Capital, Net** (1,496) 30 days Cash Used In Operations (1,06
Slide 14: FY19 Outlook
FY19 Outlook On the following slides, McKesson presents an overview of its Fiscal 2019 Outlook assumptions. These assumptions consist of certain non-GAAP measures. McKesson does not provide forward-looking guidance on a GAAP basis as the company is unable to provide a quantitative reconciliation of
Slide 15: Fiscal 2019 Adjusted Earnings Outlook
Fiscal 2019 Adjusted Earnings Outlook Fiscal 2019 Fiscal 2018 Outlook Actual Up mid-single digit Revenues $208.4 billion percent growth Down slightly to Income from Continuing Operations before up mid-single digit $3.9 billion Interest Expense and Income Taxes percent growth Diluted Earnings per Sha
Slide 16: Fiscal 2019 Segment Adjusted Earnings Outlook
Fiscal 2019 Segment Adjusted Earnings Outlook Year-over-Year Percent Growth Revenues Operating Profit U.S. Pharmaceutical and Specialty Solutions Up low- to mid-single digit Flat to down mid-single digit Lower end of range of European Pharmaceutical Solutions Flat to up mid-single digit flat to up m
Slide 17: Fiscal 2019 Adjusted Earnings Assumptions
Fiscal 2019 Adjusted Earnings Assumptions ($ and shares in millions) FY19 Outlook Down low-double digit percent Corporate Expenses growth year over year Income From Equity Method Investment Up low- to mid-single digit percent in Change Healthcare growth year over year Interest Expense Decline year o
Slide 18: Appendix
MCKESSON Appendix
Slide 19: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q1 Fiscal 2019 Schedule 2 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions, except per share amounts) Change Quarter Ended June 30, 2018 Vs. Prior Period Amortization of Acquisition- Acquisition-Rel
Slide 20: GAAP to Non-GAAP Reconciliation: Q1 Fiscal 2018
GAAP to Non-GAAP Reconciliation Q1 Fiscal 2018 Quarter Ended June 30, 2017 Amortization Acquisition-Related Restructuring and Adjusted of Acquisition-Related Expenses and LIFO Inventory- Gains from Antitrust Asset Impairment Other Adjustments, Earnings As Reported (GAAP) Intangibles Adjustments Rela
Slide 21: GAAP to Non-GAAP Segment Reconciliation
GAAP to Non-GAAP Reconciliation Q1 Fiscal 2019 and Q1 Fiscal 2018 Schedule 3 McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions) Quarter Ended June 30, 2018 Quarter Ended June 30, 2017 GAAP Non-GAAP Change Adjusted Constant
Slide 22: Financial Statement Footnotes
Financial Statement Footnotes McKESSON CORPORATION FINANCIAL STATEMENT FOOTNOTES Fiscal years 2019 and 2018, as reported under GAAP, include pre-tax credits of $21 million and pre-tax charges of $26 million related to our last-in-first-out (“LIFO”) method of (1) accounting for inventories. Fiscal ye
Slide 23: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information 1 of 2 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION In an effort to provide investors with additional information regarding the Company's financial results as determined by generally accepted accounting principles ("GAAP"), McKesson Corporation (the "Compan
Slide 24: Supplemental Non-GAAP Financial Information (continued)
Supplemental Non-GAAP Financial Information 2 of 2 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) Other adjustments - The Company evaluates the nature and significance of transactions qualitatively and quantitatively on an individual basis and may include them in the determination of our Ad
Slide 25: Reconciliation of GAAP Amounts to Free Cash Flow
Reconciliation of GAAP Amounts to Free Cash Flow ($M) Q1 FY 19 Q1 FY 18 QoQ Change Major GAAP cash flow categories: Operating cash flow $ (1,061) $ 741 $ (1,802) Investing cash flow $ (875) $ (1,598) $ 723 Financing cash flow $ 1,541 $ (1,131) $ 2,672 Free cash flow (non-GAAP measure): Operating cas