McKesson Corporation · NYSE:MCK
McKesson — Investor Day (December 2019)
29 slides from McKesson's investor day presentation, Dec 18, 2019
Slide 1: McKesson Corporation FY20 Investor Update
McKesson Corporation FY20 Investor Update December 18, 2019 Brian Tyler Britt Vitalone Chief Executive Officer Chief Financial Officer
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: Today's agenda
Today’s agenda Brian Tyler Business update Chief Executive Officer Strategic overview Brian Tyler Chief Executive Officer Financial update Britt Vitalone EVP & Chief Financial Officer Q&A
Slide 4: Our Vision
Our Vision: to improve care in every setting – one product, one partner, one patient at a time
Slide 5: Executing against priorities to drive growth
Executing against priorities to drive growth Optimize performance Simplify the business Accelerate our in our U.S. and operate with strategic growth Pharmaceutical and increased focus and initiatives Specialty Solutions speed segment 5
Slide 6: Optimize performance in our U.S. Pharmaceutical & Specialty Solutions segment
Priorities: Optimize performance in our U.S. Pharmaceutical & Specialty Solutions segment Strong Leveraging our Investments to differentiated execution drive growth specialty portfolio • Renewed distribution • Targeted investments in: • 101 new physicians joined The agreement with CVS Health o Speci
Slide 7: Leveraging our differentiated specialty portfolio
Leveraging our differentiated specialty portfolio Wholesale Distribution Provider Solutions Practice Management • Retail • Distribution & GPO services • Practice operations • Health systems • Technology & analytics • Research & clinical trials • McKesson Plasma & Biologics • Value-added products & s
Slide 8: Simplify the business and operate with increased focus and speed
Priorities: Simplify the business and operate with increased focus and speed Driving transformation Realigning the Divesting non-core in the operating model organizational structure assets • Transforming the operating model: • Established global headquarters • Initiated Change Healthcare exit Cent
Slide 9: Accelerate our strategic growth initiatives
Priorities: Accelerate our strategic growth initiatives Manufacturer value Specialty Future retail proposition models Supported by data and analytics capabilities and fueled by enterprise cost savings 9
Slide 10: Track record of meeting our guidance expectations
Track record of meeting our guidance expectations Earnings growth Steady cash flow Actual 7-Year Moving Average Fiscal Original Adjusted YoY ($ Billions) Adjusted Year EPS1 Guidance Growth2 $4.0 Operating Cash Flow EPS1 Free Cash Flow 3 $3.0 2019 $13.00 – $13.80 $13.57 8% $2.0 $1.0 2018 $11.75 – $12
Slide 11: We remain confident in our FY20 outlook
We remain confident in our FY20 outlook Full-year Focused Healthy free Change outlook investments cash flow Healthcare Reaffirming FY20 Utilizing a portion of Strong balance sheet Progressing towards adjusted EPS of savings from cost and cash flow tax-efficient exit of $14.00 – $14.60 initiatives to
Slide 12: FY20 segment outlook
FY20 segment outlook: We expect to deliver adjusted operating profit growth in each segment U.S. Pharmaceutical European Medical-Surgical and Specialty Pharmaceutical Other Solutions Solutions Solutions FY20 High-single digit Flat to low-single High-single Low-single Revenue growth digit decline dig
Slide 13: USPSS FY20 outlook
U.S. Pharmaceutical USPSS…we heard & Specialty your Solutions FY20 outlook: feedback Delivering profit growth in line with original guidance FY20 Guidance Updated Outlook FY20 Revenue High-single digit growth 7% - 9% FY20 Adjusted Operating Profit Low to mid-single digit growth 3% - 5% 13
Slide 14: Disciplined and balanced capital allocation approach
Disciplined and balanced capital allocation approach Operating Cash Flow FY17 – FY19: $13.1B Disciplined Capital Allocation 2) Return Capital to 1) Strategic Growth Shareholders M&A $8.0B Dividends $0.8B Internal Investments $1.7B Share Repurchases $5.7B Underpinned by Maintenance of Investment-Grad
Slide 15: Takeaways
Takeaways Executing against Confidence in Disciplined Demonstrated priorities with reaffirmed FY20 capital allocation commitment to increased focus outlook shareholder return 15
Slide 16: Q&A
Q&A
Slide 17: Fiscal 2020 Outlook
Fiscal 2020 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 October 30, 2019 press release, McKesson does not provide forward-looking guidance on a GAAP basis a
Slide 18: Fiscal 2020 adjusted earnings outlook
Fiscal 2020 adjusted earnings outlook Fiscal 2020 Outlook Fiscal 2019 Actual Revenues Mid to high-single digit percent growth $214.3 billion Income from continuing operations before interest Flat to low-single digit percent decline $3.8 billion expense and income taxes Earnings per diluted share $14
Slide 19: Fiscal 2020 adjusted earnings outlook by segment
Fiscal 2020 adjusted earnings outlook Year-over-Year Percent Change European U.S. Pharmaceutical and Pharmaceutical Medical-Surgical Solutions Other Specialty Solutions Solutions FY20 7% - 9% Flat to low-single High-single digit Low-single Revenue digit decline growth digit growth (High-single digit
Slide 20: Fiscal 2020 adjusted earnings assumptions
Fiscal 2020 adjusted earnings assumptions ($ and shares in millions) FY20 Outlook Corporate Expenses $695 – $745 Adjusted Equity Earnings from Investment $250 – $270 In Change Healthcare Interest Expense $245 – $265 Effective Tax Rate 18 – 19% Net Income Attributable to Noncontrolling Interest Down
Slide 21: MCKESSON
MCKESSON
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Actual Adjusted EPS Full Year Fiscal 2019 (unaudited) Schedule 2 (in millions, except per share amounts) Change Year Ended March 31, 2019 Vs. Prior Year Amortization Transaction- LIFO Restructuring, of Acquisition- Related Inventory- Gains from Impairment and Other Ad
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Actual Adjusted EPS Full Year Fiscal 2018 Schedule 2 (unaudited) (Continued) (in millions, except per share amounts) Year Ended March 31, 2018 Amortization Transaction- Restructuring, of Acquisition- Related LIFO Inventory- Gains from Impairment and Other Adjusted As
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Actual Adjusted EPS Full Year Fiscal 2019 and 2018 Footnotes (1) The fourth quarters of fiscal 2019 and 2018 include pre-tax credits of $146 million and $94 million, and fiscal 2019 and 2018 include pre-tax credits of $210 million and $99 million related to our last-i
Slide 25: GAAP to Non-GAAP Reconciliation: Free Cash Flow
GAAP to Non-GAAP Reconciliation Free Cash Flow ($ in billions) FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 FY 2008 FY 2007 Free cash flow (non-GAAP measure): Operating cash flow $ 4.04 $ 4.35 $ 4.74 $ 3.67 $ 3.11 $ 3.14 $ 2.48 $ 2.95 $ 2.34 $ 2.32 $ 1.35 $
Slide 26: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation 1H Fiscal 2020 and 1H Fiscal 2019 (unaudited) Schedule 3 (in millions, except per share amounts) Six Months Ended September 30, 2019 Six Months Ended September 30, 2018 GAAP Non-GAAP Change Adjusted Adjusted Foreign Adjusted As Reported Earnings As Reported Earnings C
Slide 27: GAAP to Non-GAAP Reconciliation Footnotes
GAAP to Non-GAAP Reconciliation 1H Fiscal 2020 and 1H Fiscal 2019 Footnotes (1) Operating expenses for the first half of fiscal 2019 include 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 2017 acqui
Slide 28: Supplemental Non-GAAP Financial Information
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 Corporation (the "Company" or "we") also presents the following Non-
Slide 29: 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 of