McKesson Corporation · NYSE:MCK
McKesson — Credit Suisse Healthcare Conference 2014
31 slides from McKesson's conference presentation, Nov 11, 2014
Slide 1: McKesson Corporation Credit Suisse Healthcare Conference
McKesson Corporation Credit Suisse Healthcare Conference John Hammergren Chairman and Chief Executive Officer November 11, 2014
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 Delivers Core Segments Founded in 1833 $ 138 1/3 of all Billion in pharmaceuticals Distribution 42,800 Revenues1 used daily in North America1 Solutions Employees1 >$45B Worldwide Partners with 18% of 15 15 # in Cancer Care on Technology
Slide 4: A Vision For Better Health
A Vision For Better Health Payers Pharmaceutical Manufacturers Regulatory Agencies/ Government Better Business Better Care We make healthcare We enable better businesses run better clinical outcomes Consumer Retail Hospitals Pharmacy Alternate Care Physicians Better Connectivity We connect healthcar
Slide 5: Global Healthcare Industry In Transformation
Global Healthcare Industry In Transformation Convergence Pool of Healthcare Consumers is Growing & Consolidation Demographic Trends • Aging Population • Increase in chronic conditions Rising healthcare • Rising consumerism in healthcare costs are unaffordable Regulatory and unsustainable Environment
Slide 6: Healthcare Services Leader In North America
Healthcare Services Leader In North America 6
Slide 7: US Pharmaceutical: Operational Excellence
US Pharmaceutical: Operational Excellence Partner to Independents Operational Excellence Best-in-class network Quality, efficiency and speed In 2014 In 2008 over 1,851 3,3001 99.98% OneStopSM Generics stores stores Accuracy Scale and Reach Growth 40,000+ customer locations2 A Broad Value Proposition
Slide 8: Creating Value For Rite Aid
Creating Value For Rite Aid Direct Store Delivery to Over 4,500 Stores Together creating greater value from our sourcing scale and supply chain excellence Creating significant: Sourcing Efficiencies OneStopSM Generics Working Capital Benefits Sourcing Improved Patient Satisfaction Expertise 8
Slide 9: 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 10: Specialty Health: Positioned For Continued Growth
Specialty Health: Positioned For Continued Growth Technology platform Broad expertise to drive enhanced value in all aspects for physicians, payers of cancer care and pharmaceutical delivery manufacturers Deep Expanding Physician presence in other Engagement specialties 10
Slide 11: Medical Surgical: A Leader In Alternate Site
Medical Surgical: A Leader In Alternate Site Combined Sales Force of Over 1,400 Reps Revenues 14% CAGR FY08 – FY14 Focus on the Investments to Drive Customer While Growth Furthering PSS Integration Optimizing Executing on Supplier Distribution and Sourcing Opportunities Network 11
Slide 12: Technology Solutions: Powering Connectivity
Technology Solutions: Powering Connectivity McKesson’s Unique Value Proposition 360o View Expertise working with payers, hospitals, physicians, pharmacies Scaled leadership positions Comprehensive portfolio 12
Slide 13: Global Sourcing Expertise
Global Sourcing Expertise Creating Value for Our Stakeholders Across the Globe NorthStar / Cypress Sivem acquisition collaboration in Canada 2002 2007 2012 2014 NorthStar Sivem program launched / launch PSS acquisition 13
Slide 14: Celesio: A Platform For International Expansion
Celesio: A Platform For International Expansion 14
Slide 15: Global Healthcare Platform With Celesio
Global Healthcare Platform With Celesio Key Milestones Towards a Long-Term Partnership Begin execution on synergies Secure Operating Control Anticipated annual By End of Calendar 2014 synergies of $275-$325 million by the fourth year • Current ownership is 76% • Coordination Team engaged in initial
Slide 16: In Business For Better Health
In Business For Better Health 16
Slide 17: Strong Performance: First Half Of FY2015
Strong Performance: First Half Of FY2015 $89B 36% Growth Total Revenues Total Revenues 20% Adjusted EPS Growth 48% Adjusted 26 Growth % Gross Profit Expansion Adjusted Operating Profit For the six months ended September 30, 2014. Percentage growth expressed on a year over year basis relative to the
Slide 18: New Long-Term Adjusted Operating Margin Targets For Both Segments
June 2014: New Long-Term Adjusted Operating Margin Targets For Both Segments 250 – 300 Distribution basis points 20% Solutions High Teens Technology Adjusted Operating Solutions Margin 18
Slide 19: We Have A Track Record Of Steady Revenue Growth
We Have A Track Record Of Steady Revenue Growth… ($ Billions) $138 $108 $112 $122 $122 $101 $106 FY08 FY09 FY10 FY11 FY12 FY13 FY14 19
Slide 20: 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 $3.45 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Reflects non-GAAP information calculated on an Adjusted Earnings basis. A reconciliation to GAAP is available in the appendix to th
Slide 21: Our Operating Cash Flows Have Steadily Increased
Our Operating Cash Flows Have Steadily Increased OCF ($ 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 $962 million Securities Litigation payment. 21
Slide 22: Historical Portfolio Approach To Capital Deployment
We Remain Committed To Our Historical Portfolio Approach To Capital Deployment… FY08 - FY14 ($ Billions) Dividends $1.1 Internal Capital Spending $2.6 $7.8 $25 Billion of Capital Share Deployed from FY08 – FY14 Repurchases $13.7 Acquisitions 22
Slide 23: 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 • Provisioning for dividends • Reviewing current priorities and
Slide 24: McKesson Drives Sustained Value Creation
McKesson Drives Sustained Value Creation Attractive healthcare markets Experienced and • Public policy agenda supports greater access and tenured management improved efficiency team with a steady • Demographics drive long-term demand in North track record of America and globally delivering results S
Slide 25: McKesson
MSKESSON
Slide 26: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 - 2014 (unaudited) (in millions, except per share amounts) Year Ended March 31, 2014 Amortization Acquisition As Recast of Acquisition- Expenses and Litigation Adjusted As Recast Related Related Reserve LIFO-Rel
Slide 27: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 - 2014 (unaudited) (in millions, except per share amounts) Year Ended March 31, 2012 Amortization Acquisition of Acquisition- Expenses and Litigation Adjusted As Reported Related Related Reserve LIFO-Related Ear
Slide 28: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 - 2014 (unaudited) (in millions, except per share amounts) Year Ended March 31, 2010 Amortization Acquisition of Acquisition- Expenses and Litigation Adjusted As Reported Related Related Reserve LIFO-Related Ear
Slide 29: Reconciliation of GAAP Operating Results to Adjusted Earnings
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 - 2014 (unaudited) (in millions, except per share amounts) Year Ended March 31, 2008 Amortization Acquisition of Acquisition- Expenses and Litigation Adjusted As Reported Related Related Reserve LIFO-Related Ear
Slide 30: Reconciliation of GAAP Segment Results to Adjusted Earnings
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 - 2014 (unaudited) (in millions) Year ended March 31, 2014 Year ended March 31, 2013 Year ended March 31, 2012 Year ended March 31, 2011 Corporate & Corporate & Corporate & Corporate & Distribution Techn
Slide 31: Reconciliation of GAAP Segment Results to Adjusted Earnings
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) FOR FISCAL 2008 - 2014 (unaudited) (in millions) Year ended March 31, 2010 Year ended March 31, 2009 Year ended March 31, 2008 Corporate & Corporate & Corporate & Distribution Technology Interest Distribution Technology