McKesson Corporation · NYSE:MCK
McKesson — Q4 2020 Earnings Presentation
26 slides from McKesson's earnings presentation, May 20, 2020
Slide 1: Fiscal 2020 Financial Results, Fiscal 2021 Annual Outlook
McKesson Corporation Fiscal 2020 Financial Results Fiscal 2021 Annual Outlook May 20, 2020
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 Updates
Company Updates Strong Finish to FY20; Long-Term Fundamentals Remain Solid Company Updates Business Summary • On March 10, 2020, McKesson completed the • Q4 revenue growth of 12%1 and full-year revenue separation of its investment in Change Healthcare growth of 8%1 • McKesson awarded approximately $
Slide 4: Condensed Consolidated Statement of Earnings
Condensed Consolidated Statement of Earnings Q4 and Full Year Fiscal 2020 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions, except per share amounts) FY 20 Change FY 20 Change Revenues $ 58,535 12 % $ 231,051 8 % Gross Profit $ 3,200 7 % $ 11,746 4 % Total Operating Expenses $ (2,241) 8
Slide 5: U.S. Pharmaceutical and Specialty Solutions
U.S. Pharmaceutical and Specialty Solutions Q4 and Full Year Fiscal 2020 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 20 Change FY 20 Change U.S. Pharmaceutical and Specialty Solutions Revenues $ 46,274 13 % $ 183,341 9 % Operating Profit $ 772 3 % $ 2,671 6 % Operating Margin 1.
Slide 6: European Pharmaceutical Solutions
European Pharmaceutical Solutions Q4 and Full Year Fiscal 2020 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 20 Change FY 20 Change European Pharmaceutical Solutions Revenues $ 7,151 6 % $ 27,390 1 % Operating Profit $ 75 226 % $ 231 5 % Operating Margin 1.05% 71 bp 0.84% 4 bp • Q
Slide 7: Medical-Surgical Solutions
Medical-Surgical Solutions Q4 and Full Year Fiscal 2020 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 20 Change FY 20 Change Medical-Surgical Solutions Revenues $ 2,205 13 % $ 8,305 9 % Operating Profit $ 170 (1) % $ 679 12 % Operating Margin 7.71% (109) bp 8.18% 24 bp • Q4 revenu
Slide 8: Other & Corporate
Other & Corporate Q4 and Full Year Fiscal 2020 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 20 Change FY 20 Change Other1 Revenues $ 2,905 3 % $ 12,015 3 % Operating Profit $ 242 (6) % $ 953 (4) % Operating Margin NM NM NM NM Corporate Operating Loss $ (224) 25 % $ (685) 23 % • Q
Slide 9: Opioid-Related Costs
Opioid-Related Costs Results Q4 Q4 Full Year Full Year ($ in millions) FY 20 FY 19 FY 20 FY 19 Opioid-Related Costs Litigation Reserves Adjustment $ — $ 22 $ 82 $ 37 Legal Fees and Other $ 42 $ 33 $ 150 $ 114 Total Expense $ 42 $ 55 $ 232 $ 151 Litigation Reserves Adjustment: • McKesson recorded in
Slide 10: Cash
Cash ($ in millions) Full Year Cash Balance Walk* Cash Dynamics Balance at March 31, 2019 $ 2,981 • Free cash flow of $3.9 billion Operating Cash Flow 4,374 Capital Expenditures (506) • Returned $2.2 billion of cash to Free Cash Flow 3,868 shareholders Acquisitions (133) Other Investing Cash Flows 6
Slide 11: Fiscal 2021 Outlook
Fiscal 2021 Outlook On the following slides, McKesson presents an overview of its fiscal 2021 Outlook assumptions. These assumptions consist of certain non-GAAP measures. As outlined in the company’s May 20, 2020 press release, McKesson does not provide forward-looking guidance on a GAAP basis as th
Slide 12: Fiscal 2021 Outlook: Key Enterprise Assumptions
Fiscal 2021 Outlook Key Enterprise Assumptions • We are not assuming that a second wave of COVID-19 returns, leading to shelter at home scenarios precluding patient consumption of healthcare services, supplies and pharmaceutical products • We are not assuming any systemic customer insolvency events
Slide 13: Fiscal 2021 Outlook
Fiscal 2021 Outlook Fiscal 2021 Outlook Fiscal 2020 Actual Revenues 2% to 4% growth $231.1 billion 10% to 15% decline $3.8 billion Adjusted Income from Operations1 (Excluding Change Healthcare Equity Earnings (Excluding Change Healthcare Equity Earnings from Prior Year: 5% to 8% decline) from Prior
Slide 14: Fiscal 2021 Outlook: Year-over-Year Change by Segment
Fiscal 2021 Outlook Year-over-Year Change U.S. Pharmaceutical European Medical-Surgical and Specialty Pharmaceutical Other Solutions Solutions Solutions Full Year 3% to 6% growth 0% to 5% decline 3% to 8% decline 7% to 12% decline FY21 Revenue Full Year 27% to 32% decline FY21 Adjusted 0% to 4% decl
Slide 15: Appendix
Appendix
Slide 16: Reconciliation of GAAP Amounts to Free Cash Flow
Reconciliation of GAAP Amounts to Free Cash Flow Full Year Full Year ($ in millions) FY20 FY19 YoY Change Major GAAP cash flow categories: Operating cash flow $ 4,374 $ 4,036 $ 338 Investing cash flow $ (579) $ (1,381) $ 802 Financing cash flow $ (2,734) $ (2,227) $ (507) Free cash flow (non-GAAP me
Slide 17: GAAP to Non-GAAP Reconciliation: Q4 Fiscal 2020
GAAP to Non-GAAP Reconciliation Q4 Fiscal 2020 McKESSON CORPORATION Schedule 2A RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions, except per share amounts) Three Months Ended March 31, 2020 Change Vs. Prior Quarter Amortization Transaction- LIFO Gains
Slide 18: GAAP to Non-GAAP Reconciliation: Q4 Fiscal 2019
GAAP to Non-GAAP Reconciliation Q4 Fiscal 2019 Three Months Ended March 31, 2019 Schedule 2A (Continued) Amortization Transaction- LIFO Gains from Restructuring, of Acquisition- Related Inventory- Antitrust Impairment and Other Adjusted As Reported Related Expenses and Related Legal Related Adjustme
Slide 19: GAAP to Non-GAAP Reconciliation: Full Year Fiscal 2020
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2020 McKESSON CORPORATION Schedule 2B RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions, except per share amounts) Year Ended March 31, 2020 Change Vs. Prior Year Amortization Transaction- LIFO Gains fro
Slide 20: GAAP to Non-GAAP Reconciliation: Full Year Fiscal 2019
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2019 Schedule 2B Year Ended March 31, 2019 (Continued) Amortization Transaction- LIFO Gains from Restructuring, of Acquisition- Related Inventory- Antitrust Impairment and Other Adjusted As Reported Related Expenses and Related Legal Related Adjustmen
Slide 21: GAAP to Non-GAAP Reconciliation: Q4 Segment Results
GAAP to Non-GAAP Reconciliation Q4 Fiscal 2020 and Q4 Fiscal 2019 McKESSON CORPORATION Schedule 3A RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions, except per share amounts) Three Months Ended March 31, 2020 2019 GAAP Non-GAAP Change Foreign F
Slide 22: GAAP to Non-GAAP Reconciliation: YTD Segment Results
GAAP to Non-GAAP Reconciliation YTD Fiscal 2020 and YTD Fiscal 2019 McKESSON CORPORATION Schedule 3B RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions, except per share amounts) Year Ended March 31, 2020 2019 GAAP Non-GAAP Change Foreign Foreign
Slide 23: Financial Statement Notes
Financial Statement Notes 1 of 2 McKESSON CORPORATION FINANCIAL STATEMENT NOTES (1) Total operating expenses for the year ended March 31, 2019 includes 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
Slide 24: Financial Statement Notes (continued)
Financial Statement Notes 2 of 2 FINANCIAL STATEMENT NOTES (continued) (8) Equity earnings and charges from investment in Change Healthcare Joint Venture for the year ended March 31, 2020 primarily includes a pre-tax charge of $1.16 billion ($864 million after-tax) representing an other- than-tempor
Slide 25: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information McKESSON CORPORATION SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION 1 of 2 In an effort to provide investors with additional information regarding the Company's financial results as determined by generally accepted accounting principles ("GAAP"), McKesson Cor
Slide 26: Supplemental Non-GAAP Financial Information (continued)
Supplemental Non-GAAP Financial Information 2 of 2 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) Income taxes on Adjusted Earnings are calculated in accordance with Accounting Standards Codification ("ASC") 740, “Income Taxes,” which is the same accounting principle used by the Company whe