McKesson Corporation · NYSE:MCK
McKesson — Q1 FY2020 Earnings Presentation
21 slides from McKesson's earnings presentation, Jul 31, 2019
Slide 1: McKesson Corporation Q1 Fiscal 2020 Financial Results
McKesson Corporation Q1 Fiscal 2020 Financial Results July 31, 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 Strong Start to Fiscal 2020; Raised Full-Year Guidance Company Updates Business Summary • Change Healthcare, Inc. began trading on the • Revenue growth of 6%1 Nasdaq Global Select Market as “CHNG” on • Adjusted Earnings per diluted share of $3.31 June 27, 2019 • Raised Fiscal 2020 Adj
Slide 4: Condensed Consolidated Statement of Earnings
Condensed Consolidated Statement of Earnings Q1 Fiscal 2020 Results Adjusted Results Q1 YoY ($ in millions, except per share amounts) FY 2020 Change Revenues $55,728 6% Gross Profit $2,769 2% Operating Expenses ($1,999) 1% Income from Continuing Operations before Interest Expense and Income Taxes $9
Slide 5: U.S. Pharmaceutical and Specialty Solutions
U.S. Pharmaceutical and Specialty Solutions Q1 Fiscal 2020 Results Adjusted Results Q1 YoY ($ in millions) FY 2020 Change U.S. Pharmaceutical and Specialty Solutions Revenues $44,165 8% Operating Profit $600 11% Operating Margin 1.36% 4 bp • Q1 revenue growth driven by solid contributions from our l
Slide 6: European Pharmaceutical Solutions
European Pharmaceutical Solutions Q1 Fiscal 2020 Results Adjusted Results Q1 YoY ($ in millions) FY 2020 Change European Pharmaceutical Solutions Revenues $6,710 (3)% Operating Profit $35 (53)% Operating Margin 0.52% (55) bp • Q1 revenue negatively impacted by $421 million due to foreign currency ef
Slide 7: Medical-Surgical Solutions
Medical-Surgical Solutions Q1 Fiscal 2020 Results Adjusted Results Q1 YoY ($ in millions) FY 2020 Change Medical-Surgical Solutions Revenues $1,903 12% Operating Profit $159 27% Operating Margin 8.36% 102 bp • Q1 revenue growth primarily driven by the MSD acquisition and growth in our Primary Care a
Slide 8: Other & Corporate
Other & Corporate Q1 Fiscal 2020 Results Adjusted Results Q1 YoY ($ in millions) FY 2020 Change Other Revenues $2,950 (1)% Operating Profit $276 30% Operating Margin NM NM Corporate Operating Loss ($137) 44% • Other primarily includes McKesson Canada, McKesson Prescription Technology Solutions (MRxT
Slide 9: Cash
Cash Cash Balance Walk* Cash Dynamics ($ in millions) • Free cash flow of ($162) million Balance at March 31, 2019 $ 2,981 Operating Cash Flow (51) • Share repurchases of $0.7 billion Capital Expenditures (111) Free Cash Flow (162) • Remaining share repurchase Acquisitions (46) Other Investing Cash
Slide 10: 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 July 31, 2019 press release, McKesson does not provide forward-looking guidance on a GAAP basis as the comp
Slide 11: Fiscal 2020 Adjusted Earnings Outlook
Fiscal 2020 Adjusted Earnings Outlook Fiscal 2019 Fiscal 2020 Outlook Actual Revenues Low-to-mid single digit percent growth $214.3 billion Income from Continuing Operations before Flat to low-single digit percent decline $3.8 billion Interest Expense and Income Taxes Earnings per Diluted Share $14.
Slide 12: Fiscal 2020 Segment Adjusted Earnings Outlook
Fiscal 2020 Segment Adjusted Earnings Outlook Year-over-Year Percent Change Revenues Operating Profit Low- to mid-single digit Low- to mid-single digit U.S. Pharmaceutical and Specialty Solutions growth growth Low- to mid-single digit Low end of low- to mid- European Pharmaceutical Solutions growth
Slide 13: Fiscal 2020 Adjusted Earnings Assumptions
Fiscal 2020 Adjusted Earnings Assumptions ($ and shares in millions) FY20 Outlook Corporate Expenses Low end of $725 - $775 Income From Equity Method Investment Attributable $250 - $270 to McKesson’s Interest in Change Healthcare Interest Expense $245 - $265 Effective Tax Rate 18 -19% Net Income Att
Slide 14: Appendix
MCKESSON Appendix
Slide 15: Reconciliation of GAAP Amounts to Free Cash Flow
Reconciliation of GAAP Amounts to Free Cash Flow ($ in millions) Q1 FY 20 Q1 FY 19 YoY Change Major GAAP cash flow categories: Operating cash flow $ (51) $ (1,061) $ 1,010 Investing cash flow $ (129) $ (875) $ 746 Financing cash flow $ (872) $ 1,541 $ (2,413) Free cash flow (non-GAAP measure): Opera
Slide 16: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q1 Fiscal 2020 McKESSON CORPORATION Schedule 2 RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions, except per share amounts) Change Quarter Ended June 30, 2019 Vs. Prior Quarter Amortization Transaction- Restructuring of
Slide 17: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q1 Fiscal 2019 Schedule 2 Quarter Ended June 30, 2018 Amortization of Acquisition- Transaction-Related Restructuring and Adjusted Related Expenses and LIFO Inventory- Gains from Antitrust Asset Impairment Other Adjustments, Earnings As Reported (GAAP) Intangibles Adju
Slide 18: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q1 Fiscal 2020 and Q1 Fiscal 2019 Schedule 3 McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions) Quarter Ended June 30, 2019 Quarter Ended June 30, 2018 GAAP Non-GAAP Change Adjusted Adjusted
Slide 19: Financial Statement Footnotes
Financial Statement Footnotes McKESSON CORPORATION FINANCIAL STATEMENT NOTES (1) Operating expenses for fiscal 2019 include non-cash goodwill impairment charges of $570 million (pre-tax and after-tax) for our European Pharmaceutical Solutions segment. This charge is included under "Other Adjustments
Slide 20: 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 21: 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