McKesson Corporation · NYSE:MCK
McKesson — J.P. Morgan Healthcare Conference 2015
31 slides from McKesson's conference presentation, Jan 13, 2015
Slide 1: McKesson Corporation J.P. Morgan Healthcare Conference
McKesson Corporation J.P. Morgan Healthcare Conference John Hammergren Chairman and Chief Executive Officer January 13, 2015
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: McKesson At-A-Glance
McKesson At-A-Glance Driving Better Health for Over 180 Years 2 Core Segments Founded in 1833 Operates in Over 20 Countries3 >$170B 2 Distribution Solutions Combined Revenues Serves Pharmacies and Hospitals 120K 85,000 Globally Daily1 >12K Technology Employees1 Owned or Banner Solutions Worldwide Ph
Slide 4: Global Healthcare Industry in Transformation
Global Healthcare Industry in Transformation Demand for Healthcare is Regulatory Environment Growing Demographic Trends Rising • Aging Population Healthcare • Increase in Chronic Conditions Costs The Age Convergence & of the ` Consolidation Consumer 4
Slide 5: A Vision for Better Health…
A Vision for Better Health… Payers Pharmaceutical Regulatory Agencies/ Manufacturers Government Consumer Retail Hospitals Better Pharmacy Better Business Care We make healthcare Alternate Care Physicians We enable better businesses run better clinical outcomes Better Connectivity We connect healthca
Slide 6: …Delivering Solutions and Value Globally
…Delivering Solutions and Value Globally Market Leading Positions • U.S. and Canada – OneStopSM Pharmaceutical Distribution and Services • Specialty Distribution and Services • Medical-Surgical Distribution • European Retail Pharmacy, Distribution and Service Operations • Technology – connectivity a
Slide 7: Healthcare Services Leader in North America
Healthcare Services Leader in North America 7
Slide 8: US Pharmaceutical: Operational Excellence…
US Pharmaceutical: Operational Excellence… 99.98 % OneStopSM Order Accuracy Generics Operational Excellence Best-in-class network quality, 21% CAGR efficiency and speed Since FY031 A Broad Value Proposition Manufacturer Services 1 As of March 31, 2014 8
Slide 9: …Creating Value for Our Customers
…Creating Value for Our Customers Scale and supply chain excellence Expanding Relationships with Creating Institutional Pharmacy Value for Retail Pharmacy Partnering with Independent Pharmacy More than 3,5001 stores 1,600+ new stores since 2008 1 As of October 31, 2014 9
Slide 10: Canada: Innovation and Market Leadership
Canada: Innovation and Market Leadership >1,700 stores in all 10 provinces Banner and 2 territories Programs Best-in-class network Generic Rx and speed Quality, efficiency Medicine Shoppe Canada 16 Distribution Centers 7 Specialty Pharmacies Specialty Pharmacies 85+ & Distribution Infusion Clinics A
Slide 11: Specialty Health: Positioned for Continued Growth
Specialty Health: Positioned for Continued Growth A Broad Value We touch all aspects of Specialty patient care… Proposition Physicians • Oncology and Multi-Specialty Distribution and Practice Management • One of the largest community-based Oncology Pharmacies Hospitals networks in the U.S. • Advance
Slide 12: Medical-Surgical: A Leader in Alternate Site
Medical-Surgical: A Leader in Alternate Site Combined sales Revenues force of more than 1,400 Reps 14% CAGR FY08 – FY14 Focus on the customer Investments to drive while furthering growth PSS integration Optimizing Executing on supplier distribution and sourcing opportunities network As of March 31,
Slide 13: Technology Solutions: Powering Connectivity
Technology Solutions: Powering Connectivity McKesson’s Unique Value Proposition – 360° View • Expertise working with payers, hospitals, physicians, pharmacies • Scaled leadership positions • Comprehensive portfolio 13
Slide 14: Global Sourcing Expertise
Global Sourcing Expertise A Valuable Generics Channel Partner with Global Scale NorthStar / Sivem Cypress Acquisition Collaboration in Canada 2002 2007 2012 2014 Sivem Launched / NorthStar Program Launch PSS Acquisition 14
Slide 15: Celesio: Executing Acquisition Synergies
Celesio: Executing Acquisition Synergies A Platform for International Expansion • Global procurement team • Experienced executive leadership teams • Shared values and goals to create opportunities for customers, business partners and shareholders Annual $275M – $325M Synergies by FY19 15
Slide 16: Celesio: Acquisition Milestones
Celesio: Acquisition Milestones Priorities Post Operating Control FY15 FY16 FY17 FY18 FY19 Operating Control Secured Annual Synergies Begin Execution on Synergies $275M - $325M by FY19 • Our current ownership remains 76% • We continue to consolidate Celesio’s results • Minority shareholders will rec
Slide 17: In Business for Better Health
In Business for Better Health Pharmaceutical Medical Surgical Distribution Supplies Global Reach Technology Specialty 17
Slide 18: Strong Performance: First Half of FY15
Strong Performance: First Half of FY15 $89B 36% Growth Total Revenues Total Revenues 20% Adjusted EPS Growth 48% Adjusted 26 Growth % Gross Profit Expansion Adjusted Operating Profit For the six months ended September 30, 2014. Percentage growth expressed on a year over year basis relative to the si
Slide 19: We Have a Track Record of Steady Revenue Growth…
We Have a Track Record of Steady Revenue Growth… ($ Billions) $138 $108 $112 $122 $122 $101 $106 FY08 FY09 FY10 FY11 FY12 FY13 FY14 19
Slide 20: …That We Have Leveraged into Higher Adjusted EPS Growth
…That We Have Leveraged into Higher Adjusted EPS Growth FY15 Guidance $10.50 - $10.90 $8.56 $6.35 $6.45 $4.70 $5.19 $4.27 $3.45 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Reflects non-GAAP information calculated on an Adjusted Earnings basis. A reconciliation to GAAP is available in the appendix to thi
Slide 21: Our Operating Cash Flows Have Steadily Increased
Our Operating Cash Flows Have Steadily Increased OCF ($ Billions) 7 Year Moving Average $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 FY08* FY09 FY10 FY11 FY12 FY13 FY14 *FY08 excludes $962 million Securities Litigation payment. 21
Slide 22: Portfolio Approach to Capital Deployment…
We Remain Committed to Our Historical Portfolio Approach to Capital Deployment… FY08 - FY14 ($ Billions) $1.1 Dividends Internal Capital $25B Spending $2.6 of capital $7.8 Share Repurchases deployed from FY08 – FY14 $13.7 Acquisitions 22
Slide 23: …And We are Well Positioned to Drive Continued Growth
…And We are Well Positioned to Drive Continued Growth • Making key capital investments internally to support long-term growth • Pursuing strategic acquisitions and managing our portfolio of assets • Maintaining investment grade ratings • Maintaining our long-term and balanced approach to capital dep
Slide 24: McKesson Drives Sustained Value Creation
McKesson Drives Sustained Value Creation Attractive Healthcare Markets Experienced and • Public policy agenda supports greater access tenured management and improved efficiency team with a steady • Demographics drive long-term demand in track record of North America and globally delivering results S
Slide 25: McKesson
MCKESSON
Slide 26: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts) Six Months Ended September 30, 2014 Amortization Acquisition of Acquisition- Expenses and Litigation Adjusted As Re
Slide 27: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts) Year Ended March 31, 2013 Amortization Acquisition of Acquisition- Expenses and Litigation Adjusted As Reported Rel
Slide 28: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts) Year Ended March 31, 2011 Amortization Acquisition of Acquisition- Expenses and Litigation Adjusted As Reported Rel
Slide 29: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions, except per share amounts) Year Ended March 31, 2009 Amortization Acquisition of Acquisition- Expenses and Litigation Adjusted As Reported Rel
Slide 30: Reconciliation of GAAP Segment Results to Adjusted Earnings
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions) Six Months Ended September 30, 2014 Year ended March 31, 2014 Year ended March 31, 2013 Year ended March 31, 2012 Corporate & Corpora
Slide 31: Reconciliation of GAAP Segment Results to Adjusted Earnings
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 THROUGH SIX MONTHS ENDED SEPTEMBER 30, 2014 (unaudited) (in millions) Year ended March 31, 2011 Year ended March 31, 2010 Year ended March 31, 2009 Year ended March 31, 2008 Corporate & Corporate & Corpo