Slide 1: McKesson Corporation Third Quarter Fiscal 2023 Earnings Call
McKesson Corporation Third Quarter Fiscal 2023 Earnings Call February 1, 2023
Slide 2: Cautionary Statements
Cautionary Statements This presentation contains 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. Forward- looking statements may be identified by their use of terminology such as “believes,” “expects,”
Slide 3: Delivering sustainable growth and long-term shareholder value
Delivering sustainable growth and long-term shareholder value Our Vision: To improve care in every setting – one product, one partner, one patient at a time Our Priorities: Focus on Evolve and Expand Sustainable People and Grow the Oncology and Core Culture Portfolio Biopharma Growth Ecosystems 3 20
Slide 4: Third Quarter Fiscal 2023 Results
Third Quarter Fiscal 2023 Results
Slide 5: Continued strength and momentum across business
Continued strength and momentum across business Business Summary Company Updates • Q3 revenues of $70.5 billion increased 3% • Recognized by Newsweek as one of America’s Greatest Workplaces for Diversity in 2023 • Q3 Adjusted Earnings per Diluted Share of $6.90 increased 12% • Science-Based Target i
Slide 6: Consolidated financial information
Consolidated financial information Q3 and YTD Fiscal 2023 Results Results Q3 YoY YTD Q3 YoY ($ and shares in millions, expect per share amounts) FY 23 Change FY 23 Change Revenues $ 70,490 3 % $ 207,801 5 % Adjusted Gross Profit $ 3,050 (10) % $ 9,132 (7) % Adjusted Operating Expenses $ (1,835) (14)
Slide 7: U.S. Pharmaceutical
U.S. Pharmaceutical Q3 and YTD Fiscal 2023 Results Results Q3 YoY YTD Q3 YoY ($ in millions) FY 23 Change FY 23 Change U.S. Pharmaceutical Revenues $ 61,934 13 % $ 178,940 13 % Adjusted Segment Operating Profit $ 778 6 % $ 2,245 4 % Adjusted Segment Operating Profit Margin 1.26 % (8) bp 1.25 % (11)
Slide 8: Prescription Technology Solutions
Prescription Technology Solutions Q3 and YTD Fiscal 2023 Results Results Q3 YoY YTD Q3 YoY ($ in millions) FY 23 Change FY 23 Change Prescription Technology Solutions Revenues $ 1,121 9 % $ 3,205 13 % Adjusted Segment Operating Profit $ 155 7 % $ 461 8 % Adjusted Segment Operating Profit Margin 13.8
Slide 9: Medical-Surgical Solutions
Medical-Surgical Solutions Q3 and YTD Fiscal 2023 Results Results Q3 YoY YTD Q3 YoY ($ in millions) FY 23 Change FY 23 Change Medical-Surgical Solutions Revenues $ 2,986 (3) % $ 8,421 (4) % Adjusted Segment Operating Profit $ 336 2 % $ 911 1 % Adjusted Segment Operating Profit Margin 11.25 % 54 bp 1
Slide 10: International
International Q3 and YTD Fiscal 2023 Results Results Q3 YoY YTD Q3 YoY ($ in millions) FY 23 Change FY 23 Change International Revenues1 $ 4,449 (53) % $ 17,235 (38) % Adjusted Segment Operating Profit1 $ 143 (36) % $ 418 (25) % Adjusted Segment Operating Profit Margin 3.21 % 86 bp 2.43 % 43 bp Q3 F
Slide 11: Corporate
Corporate Q3 and YTD Fiscal 2023 Results Results Q3 YoY YTD Q3 YoY ($ in millions) FY 23 Change FY 23 Change Corporate Adjusted Corporate Expenses $ (19) (88) % $ (308) (22) % Q3 Adjusted Corporate Expenses decreased 88% year-over-year driven by a pre-tax benefit of $126 million associated with gain
Slide 12: Opioid-Related Costs
Opioid-Related Costs Q3 and YTD Fiscal 2023 Results Results Q3 Q3 YTD Q3 YTD Q3 ($ in millions) FY 23 FY 22 FY 23 FY 22 Opioid-related costs Claims and litigation charges, net (GAAP-only) $ (1) $ 7 $ (5) $ 193 Legal fees and other $ 9 $ 33 $ 37 $ 104 Total expense $ 8 $ 40 $ 32 $ 297 Claims and Liti
Slide 13: Cash
Cash ($ in millions) YTD Cash Balance Walk Cash Dynamics Balance at March 31, 20221 $ 3,935 Free Cash Flow of $1.5 billion Operating cash flow 1,834 Returned $3.7 billion of cash to shareholders year-to-date Capital expenditures (376) • Repurchased $3.5 billion of shares Free Cash Flow 1,458 Acquisi
Slide 14: Fiscal 2023 Outlook
Fiscal 2023 Outlook On the following slides, McKesson presents an overview of its fiscal 2023 Outlook assumptions. The Company does not provide forward-looking guidance on a GAAP basis as McKesson is unable to provide a quantitative reconciliation of this forward-looking Non- GAAP measure to the mos
Slide 15: Fiscal 2023 outlook
Fiscal 2023 outlook FY23 Adjusted EPS Guidance $25.75 to $26.15 FY23 Outlook FY22 Actual COVID-19 vaccine distribution for U.S. government $0.70 to $0.80 $0.89 Previously $0.60 to $0.70 Kitting, storage, and distribution of ancillary supplies for U.S. government $1.10 to $1.20 $1.78 and COVID-19 tes
Slide 16: Full Year FY23 Adjusted EPS guidance increased
Full Year FY23 Adjusted EPS guidance increased $25.75 to $26.15 $24.45 to $24.95 FY23 Outlook COVID-19 Related Items, Other2 Operating Performance FY23 Outlook McKesson Ventures, and November 1, 2022 Tax Receivable Agreement1 February 1, 2023 1 Outlook range increased to $2.30 to $2.50, from previou
Slide 17: Fiscal 2023 outlook
Fiscal 2023 outlook Consolidated metrics Metric Fiscal 2023 Outlook Fiscal 2022 Actual Adjusted Earnings per Diluted Share $25.75 to $26.15 $23.69 Previously $24.45 to $24.95 Revenues 3% to 7% growth 11% growth Adjusted Operating Profit 2% to 6% growth 25% growth Previously 4% decline to 2% growth A
Slide 18: Fiscal 2023 outlook
Fiscal 2023 outlook Segment metrics U.S. Pharmaceutical Prescription Technology Medical-Surgical International Solutions Solutions FY23 Revenue 12% to 15% growth 10% to 16% growth 1% to 5% decline 42% to 46% decline Previously 4% to 8% decline FY23 Adjusted Segment Operating Profit: Reported 5% to 8
Slide 19: Appendix
Appendix
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q3 and YTD Fiscal 2023 and Fiscal 2022 McKESSON CORPORATION Schedule 2 RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions, except per share amounts) Three Months Ended December 31, Nine Months Ended December 31, 2022 2021
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q3 and YTD Fiscal 2023 and Fiscal 2022 Schedule 2 McKESSON CORPORATION (Continued) RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions, except per share amounts) Three Months Ended December 31, Nine Months Ended December 31
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q3 and YTD Fiscal 2023 and Fiscal 2022 McKESSON CORPORATION Schedule 2 RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (Continued) (unaudited) (in millions) Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 Change 2022 20
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q3 and YTD Fiscal 2023 and Fiscal 2022 McKESSON CORPORATION Schedule 2 RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (Continued) (unaudited) (in millions) Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 Change 2022 20
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q3 and YTD Fiscal 2023 and Fiscal 2022 McKESSON CORPORATION Schedule 2 RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (Continued) (unaudited) (in millions) (a) Certain computations may reflect rounding adjustments. (b) We calculate loss per di
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q3 Fiscal 2023 and Q3 Fiscal 2022 McKESSON CORPORATION Schedule 3 RECONCILIATION OF GAAP SEGMENT OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Three Months Ended December 31, 2022 2021 As reported As adjusted Change As adjusted Foreign For
Slide 26: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation YTD Fiscal 2023 and YTD Fiscal 2022 McKESSON CORPORATION Schedule 3 RECONCILIATION OF GAAP SEGMENT OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (Continued) (unaudited) (in millions) Nine Months Ended December 31, 2022 2021 As reported As adjusted Change As adjuste
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation YTD Fiscal 2023 and YTD Fiscal 2022 McKESSON CORPORATION Schedule 6 RECONCILIATION OF GAAP CASH FLOW TO FREE CASH FLOW (NON-GAAP) (unaudited) (in millions) Nine Months Ended December 31, 2022 2021 Change GAAP CASH FLOW CATEGORIES Net cash provided by operating activit
Slide 28: Financial Statement Notes
Financial Statement Notes McKESSON CORPORATION 1 of 2 FINANCIAL STATEMENT NOTES (1) Transaction-related expenses and adjustments for the three and nine months ended December 31, 2022 includes pre-tax net gains of $31 million ($36 million after-tax) and $66 million ($35 million after-tax), respective
Slide 29: Financial Statement Notes
Financial Statement Notes FINANCIAL STATEMENT NOTES (continued) 2 of 2 (7) Claims and litigation charges, net for the nine months ended December 31, 2021 includes: • pre-tax charges of $112 million ($93 million after-tax) related to our estimated liability for opioid-related claims of governmental e
Slide 30: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information McKESSON CORPORATION 1 of 4 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 Cor
Slide 31: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) 2 of 4 The following provides further details regarding certain adjustments made to our Adjusted Earnings per Diluted Share (Non-GAAP) financial results to arrive at our Adjusted Earnings per Diluted
Slide 32: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) 3 of 4 Restructuring, impairment, and related charges - Restructuring charges that are incurred for programs in which we change our operations, the scope of a business undertaken by our business units
Slide 33: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) 4 of 4 The Company believes the presentation of Non-GAAP measures provides useful supplemental information to investors with regard to its operating performance, as well as assists with the comparison