Mckesson Corporation · NYSE:MCK
Mckesson — Investor Presentation (November 2024)
53 slides from Mckesson's investor presentation, Nov 7, 2024
Slide 1: McKesson Corporation FY25 Investor Update
McKesson Corporation FY25 INVESTOR UPDATE Britt Vitalone | EVP & Chief Financial Officer November 7, 2024 1 McKesson Proprietary and Confidential 11/7/2024
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: Agenda
AGENDA Q2 FY25 Review FY25 Outlook Business Update Q&A 3 McKesson Proprietary and Confidential 11/7/2024
Slide 4: Accelerating the Enterprise Sustaining Long-Term Growth and Value
Accelerating the Enterprise Sustaining Long-Term Growth and Value • Integrity & Inclusion • Respect Our Purpose: • Customer-first • Excellence Advancing Health Outcomes for All® • Accountability Our Growth Pillars: Focus Expand Oncology Strengthen Modernize on People & Biopharma & Grow & Accelerate
Slide 5: Q2 FY25 Review
Q2 FY25 Review 5 McKesson Proprietary and Confidential 11/7/2024
Slide 6: Financial Results Summary
Financial Results Summary Fiscal Second Quarter Year-Over-Year Revenues Adjusted Adjusted Earnings ($ in billions) Operating Profit Per Share ($ in billions) (in dollars) 21% 7% 13% $93.7 $7.07 $77.2 $1.3 $6.23 $1.2 Q2 FY24 Q2 FY25 Q2 FY24 Q2 FY25 Q2 FY24 Q2 FY25 6 McKesson Proprietary and Confident
Slide 7: Adjusted Earnings Per Share Results
Adjusted Earnings Per Share Results Fiscal Second Quarter Year-Over-Year $0.15 $7.07 $0.22 $0.46 $(0.03) $0.04 $6.23 Q2 FY24 Operating McKesson Ventures Held-for-Sale Tax Rate Other Q2 FY25 Performance Adjusted EPS Adjusted EPS 7 McKesson Proprietary and Confidential 11/7/2024 See Supplemental Infor
Slide 8: Consistent Cash Flow + Capital Allocation Driving Shareholder Value
Consistent Cash Flow + Capital Allocation Driving Shareholder Value ($ in millions) $2,100 $(218) $(80) $(1,492) $(103) $2,509 $2,302 Q1 Cash, Operating Cash Flow Capital Expenditures Dividends Share Repurchases Other Q2 Cash, 6/30/24 9/30/24 8 McKesson Proprietary and Confidential 11/7/2024 See Sup
Slide 9: Returning Capital to Shareholders
Returning Capital to Shareholders Dividends and Share Repurchases $1,492 $809 $842 $678 $527 $75 $83 $82 $82 $80 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Dividends Share Repurchases ($ in millions) 9 McKesson Proprietary and Confidential 11/7/2024
Slide 10: FY25 Outlook
FY25 Outlook 10 McKesson Proprietary and Confidential 11/7/2024
Slide 11: Looking Ahead (FY25)
Looking Ahead (FY25) Raised full year revenue outlook to 15% - 17% growth ✓ Strong second quarter results and updated outlook for remainder of FY25 ✓ Includes ~$31 billion of incremental revenue from expanded distribution agreement with a new strategic partner in FY25 Expect full year Adjusted Opera
Slide 12: Updated FY25 Financial Outlook
Updated FY25 Financial Outlook Prior Outlook Updated Outlook August 2024 November 2024 Revenue Consolidated 13% to 15% growth 15% to 17% growth Raised Outlook U.S. Pharmaceutical 13% to 16% growth 16% to 19% growth Prescription Technology Solutions 14% to 18% growth 8% to 12% growth FY25 Adjusted EP
Slide 13: FY25 Outlook Overview
FY25 Outlook Overview Improved performance and capital return driving increased Adjusted EPS outlook FY24 $27.44 FY25 Guidance (May 2024) $31.25 to $32.05 → 14% to 17% growth Improved performance outlook +$0.50 FY25 Guidance (August 2024) $31.75 to $32.55 → 16% to 19% growth Improved performance out
Slide 14: Business Update
Business Update 14 McKesson Proprietary and Confidential 11/7/2024
Slide 15: Delivering Growth and Value Creation
Delivering Growth and Value Creation Differentiated and Scaled Platforms Durable Core Businesses Long-Term Earnings Performance Strong Financial Foundation and Credit Profile 15 15 McKesson Proprietary and Confidential 11/7/2024
Slide 16: Our Financial Strength Positions Us to Invest in Areas that Will Drive Long-Term Growth
Our Financial Strength Positions Us to Invest in Areas that Will Drive Long-Term Growth Technology + Biopharma Oncology Digital Services + AI • The US Oncology Network • Rx Savings Solutions • Service Operating Model provider additions • Product enhancements and • Cloud • Florida Cancer Specialists1
Slide 17: Accelerating Our Oncology Platform
Accelerating Our Oncology Platform 17 McKesson Proprietary and Confidential 11/7/2024
Slide 18: We Play a Critical Role in Supporting Community Oncology
We Play a Critical Role in Supporting Community Oncology Value Creation and Cost Savings for Providers and Patients Providers Biopharma Payers 18 McKesson Proprietary and Confidential 11/7/2024 Cancer Care is Increasingly Complex © 2024 McKesson Corporation. All rights reserved.
Slide 19: Differentiated Oncology Platform Built Over Time
Differentiated Oncology Platform Built Over Time Onmark Core Ventures1 GPO Florida Cancer Specialists’ business Distributor of Community oncology Differentiated Oncology-focused Internally developed & administrative specialty Group Purchasing community specialty pharmacy oncology technology services
Slide 20: Expanding Our Oncology Platform
Expanding Our Oncology Platform ~$35B+ Oncology Platform Revenue in FY25 Specialty Real-World Data, Clinical Trial Practice Distribution and Evidence, and Management Management Specialty Pharmacy Technology and Services Onmark® and Unity GPOs Leading distributor 2,750+ providers 3.1M+ patient record
Slide 21: Outstanding Reach in Community Oncology Care
Outstanding Reach in Community Oncology Care The US Oncology Network Practice Locations The US Oncology Network Pro-Forma 2014 2021 2024 with FCS1 Number 1,300+ 2,000+ 2,750+ 3,280+ of Providers Total Sites 350 500 640 740 of Care Number 17 25 31 31 of States Expanding Patient Onmark® and 10K+ Acces
Slide 22: Florida Cancer Specialists
Florida Cancer Specialists Highlights of Florida Cancer Strengthens oncology value proposition Specialists & Research Institute and Core Ventures Proposed Transaction1 Acceleration of McKesson’s oncology strategy ~530 Providers • Provides opportunities to enhance and expand existing offerings across
Slide 23: Oncology Platform Delivers Value to Providers, Patients, and Biopharma
Oncology Platform Delivers Value to Providers, Patients, and Biopharma Large and growing market with significant unmet needs Long track record of value creation and cost savings for providers and patients Strong portfolio of assets providing differentiated value proposition across key stakeholder gr
Slide 24: Accelerating Our Biopharma Platform
Accelerating Our Biopharma Platform 24 McKesson Proprietary and Confidential 11/7/2024
Slide 25: We Play a Critical Role Connecting Healthcare Stakeholders
We Play a Critical Role Connecting Healthcare Stakeholders PROVIDERS PAYERS ~950K providers Connect to most integrated with pharmacy benefit most of the managers and leading EHRs health plans PHARMACIES BIOPHARMA 650+ brands served 50K+ pharmacies across most 23B+ transactions therapeutic areas annu
Slide 26: Scaled Biopharma Services Platform
Scaled Biopharma Services Platform Leadership in biopharma services and solutions Prescription Technology Intelligent Network Solutions (RxTS) • Pharmacy claims switch • Automated insurer drug Patient assistance Automated hub services Prescription price and automated copay coverage authorization pro
Slide 27: Differentiated Biopharma Services Platform
Differentiated Biopharma Services Platform 3rd Party Logistics Affordability & Other Access 3rd Party Logistics services for Discounts offered at point of Automated insurer approval for biopharma manufacturers prescribing/dispensing drug coverage ✓ Title & non-title licensure ✓ Prior Authorization ✓
Slide 28: Connecting Stakeholders and Enhancing Biopharma Value
Connecting Stakeholders and Enhancing Biopharma Value Large and growing market with significant unmet needs Unmatched portfolio of assets providing differentiated value proposition across key stakeholder groups Connectivity into pharmacies, providers and our automated hub services position us to win
Slide 29: Medical-Surgical Solutions
Medical-Surgical Solutions Broad product portfolio and premium service offering have led to differentiated results Expansive Diversified Scaled High-Quality Private Label Portfolio Distribution Service Level Offering Differentiated Breadth of the Size, resiliency, and Value of default service offeri
Slide 30: Driving Sustainable Growth and Superior Shareholder Value
Driving Sustainable Growth and Superior Shareholder Value 30 McKesson Proprietary and Confidential 11/7/2024
Slide 31: Shareholder Value Creation Framework
Shareholder Value Creation Framework Organic • Revenue growth at or above market growth + • Disciplined tactics driving margin efficiency Operating • Increasingly innovative and efficient investments in areas that drive better leverage care and higher growth and margins + • Accelerating and moderniz
Slide 32: Long-Term Targets Supported by Consistently Strong Segment Operating Performance
Long-Term Targets Supported by Consistently Strong Segment Operating Performance Adjusted Operating Profit FY20 to FY20 FY25F Long-Term Target FY25F CAGR U.S. Pharmaceutical $2.6B 9% to 11% growth 7% 5% to 7% growth Prescription Technology $468M 11% to 15% growth 15% 11% to 12% growth Solutions Low
Slide 33: Delivering Sustainable Adjusted Operating Profit Growth
Delivering Sustainable Adjusted Operating Profit Growth 8% Reported AOP CAGR (FY20 to FY25F) $5.5B to $5.6B $4.8B $5.0B $4.9B $3.8B $3.9B FY20 FY21 FY22 FY23 FY24 FY25F 33 McKesson Proprietary and Confidential 11/7/2024 See Supplemental Information for definitions and further non-GAAP information.
Slide 34: Strategy Execution Delivering Earnings Growth and Value
Strategy Execution Delivering Earnings Growth and Value 17% Adj. EPS CAGR (FY20 to FY25F) $32.40 to $33.00 $27.44 $25.94 $23.69 $17.21 $14.95 FY20 FY21 FY22 FY23 FY24 FY25F 34 McKesson Proprietary and Confidential 11/7/2024 See Supplemental Information for definitions and further non-GAAP informatio
Slide 35: Strong Free Cash Flow Provides Financial Flexibility
Strong Free Cash Flow Provides Financial Flexibility Free Cash Flow Free Cash Flow Leverage Conversion 142% 140% 2.5x $5.0B 125% 2.3x $4.6B 119% $3.9B $3.9B $3.9B 107% $3.6B 99% 1.5x 1.4x 1.4x 1.3x Category 1 FY20 FY25F FY20 FY25F FY20 FY25F • Solid operating performance • Cash flow discipline drive
Slide 36: Disciplined Capital Allocation Framework
Disciplined Capital Allocation Framework Growth Return capital Maintain a strong investments to shareholders balance sheet Strategy-led investment Grow dividend as earnings Investment-grade balance sheet and free cash expand Strategic acquisitions Ample liquidity accelerate growth imperatives Share
Slide 37: Long-Term Financial Framework
Long-Term Financial Framework Organic Operating Capital Growth Leverage Allocation + + 6% - 8% contribution ~6% contribution 12% – 14% Long-Term Adjusted EPS Growth Target 37 McKesson Proprietary and Confidential 11/7/2024 See Supplemental Information for definitions and further non-GAAP information
Slide 38: Key Takeaways from Today
Key Takeaways from Today Transformed to a diversified healthcare services company Executing on our strategy leading to sustainable profit growth and cash flows Positioned to win in Oncology and Biopharma Services Delivering shareholder value creation Investment thesis for McKesson is compelling 38 M
Slide 39: Q&A
Q&A 39 McKesson Proprietary and Confidential 11/7/2024
Slide 40: Footnotes
Footnotes These notes refer to the financial metrics and/or defined terms presented on: Slide 4 – Accelerating the Enterprise • Adjusted EPS is defined as Adjusted Earnings per Diluted Share (Non-GAAP); See Supplemental Non-GAAP Financial Information for details. • Long-Term Adjusted EPS Growth Targ
Slide 41: Footnotes
Footnotes Slide 16 – Our Financial Strength Positions Us to Invest in Areas that Will Drive Long-Term Growth • The transaction is subject to customary closing conditions, including required regulatory clearance • AI = Artificial intelligence. Slide 19 – Differentiated Oncology Platform Built Over Ti
Slide 42: Footnotes
Footnotes Slide 32 – Long-Term Targets Supported by Consistently Strong Segment Operating Performance • Adjusted Operating Profit represents a Non-GAAP financial measure. See Supplemental Non-GAAP Financial Information for details. • CAGR is from Fiscal 2020 to Fiscal 2025 guidance midpoint. • Canad
Slide 43: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q2 Fiscal 2025 and Q2 Fiscal 2024 McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) 12 Three Months Ended September 30, 2024 2023 Change As reported Adjustments As adjusted As reported Adjust
Slide 44: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q2 Fiscal 2025 and Q2 Fiscal 2024 McKESSON CORPORATION RECONCILIATION OF GAAP EPS (NON-GAAP) (in millions) Three Months Ended September 30, 2024 2023 Change Earnings per diluted common share attributable to McKesson Corporation (GAAP) (a) $ 1.87 $ 4.92 (62)% (b) After
Slide 45: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q2 Fiscal 2025 and Q2 Fiscal 2024 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Three Months Ended September 30, 2024 2023 Change Net income (GAAP) $ 287 $ 703 (59) % Net income attributable to n
Slide 46: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q2 Fiscal 2025 and Q2 Fiscal 2024 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Three Months Ended September 30, 2024 2023 Change Gross profit (GAAP) $ 3,248 $ 3,069 6% Pre-tax adjustments (a): L
Slide 47: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q2 Fiscal 2025 and Q2 Fiscal 2024 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Three Months Ended September 30, 2024 2023 Change Interest expense (GAAP) $ (78) $ (61) 28 % Pre-tax adjustments (a
Slide 48: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2020 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING PROFIT (NON-GAAP) (in millions) Year Ended March 31, 2020 As reported As Adjusted (Non- Adjustments (a) (GAAP) GAAP) OPERATING PROFIT (LOSS) U.S. Pharmaceutical $ 2,745 $ (117) $ 2,628 Prescri
Slide 49: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2024, 2023, 2022, and 2021 McKESSON CORPORATION RECONCILIATION OF GAAP FREE CASH FLOW AND FREE CASH FLOW CONVERSION (NON-GAAP) (in millions) Year Ended March 31, 2024 2023 2022 2021 FREE CASH FLOW (NON-GAAP) Net cash provided by (used in) operating ac
Slide 50: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2024, 2023, 2022, and 2021 McKESSON CORPORATION RECONCILIATION OF GAAP FREE CASH FLOW LEVERAGE (NON-GAAP) (in millions) Year Ended March 31, 2024 2023 2022 2021 Net income (loss) (GAAP) 3,160 3,722 1,287 (4,340) Depreciation (GAAP) $ 253 $ 248 $ 279 $
Slide 51: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information McKESSON CORPORATION 1 of 3 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 52: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) 2 of 3 • Adjusted Operating Profit (Non-GAAP): We define Adjusted Operating Profit as GAAP income from continuing operations before interest expense and income taxes, excluding amortization of acquisi
Slide 53: Supplemental Non-GAAP Financial Information
Supplemental Non-GAAP Financial Information SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) 3 of 3 Claims and litigation charges - Adjustments to certain of the Company’s reserves, including those related to estimated probable settlements for its controlled substance monitoring and reporting