McKesson Corporation · NYSE:MCK
McKesson — Investor Day (June 2017)
118 slides from McKesson's investor day presentation, Jun 28, 2017
Slide 1: McKesson Corporation 2017 Investor Day
McKesson Corporation 2017 Investor Day June 28, 2017
Slide 2: 2017 Investor Day Agenda
2017 Investor Day Agenda Craig Mercer – Senior Vice President, Investor Relations John Hammergren – Chairman, President and Chief Executive Officer Paul Julian – Executive Vice President, Group President Distribution Solutions Mark Walchirk – President, U.S. Pharmaceutical Nick Loporcaro – President
Slide 3: 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 4: Welcome
Welcome John Hammergren Chairman, President and Chief Executive Officer
Slide 5: McKesson's Executive Committee
McKesson’s Executive Committee Diverse and Experienced Leadership John H. Hammergren Chairman, President & Chief Executive Officer 21 years Paul Julian James Beer Kathy McElligott EVP & Group President EVP & Chief Financial Officer EVP, Chief Information Officer & Distribution Solutions 4 years Chie
Slide 6: McKesson At A Glance
McKesson At A Glance Delivering Better Health to All Fortune 5 company $199B $4.7B FY17 operating FY17 revenues cash flow Founded in Delivering 1833 1/3 75,ooo+ of all prescription employees worldwide medicine in North More than America1 15,000 Value owned and banner pharmacies creation 1This inform
Slide 7: The Evolving Healthcare Environment
The Evolving Healthcare Environment Consolidation Industry Pressures Growing Complexity
Slide 8: McKesson's Response To Consolidation
McKesson’s Response To Consolidation Leveraging Our Sourcing Scale Case Study: ClarusONE 8
Slide 9: McKesson's Response To Industry Pressures
McKesson’s Response To Industry Pressures Deepening Our Relationships Providers Patients Payers Manufacturers Case Study: Community Oncology 9
Slide 10: McKesson's Response To Growing Complexity
McKesson’s Response To Growing Complexity Innovating in Retail Prior authorization: Claims adjudication: CoverMyMeds RelayHealth Pharmacy Narrowing Revenue / reimbursement networks: optimization: AccessHealth Payer programs Value-based care: Operational efficiency: STAR ratings Automated pharmacy so
Slide 11: Broad Solutions Portfolio
Broad Solutions Portfolio Inspiring a Better Healthcare System 5,500 2,100 Hospitals Payer Connections 117,000 1 in 5 Dentists U.S. Patient Records 800,000 CONSUMERS $2 trillion Physicians Healthcare Claims 600 12 billion Laboratories Healthcare Transactions PROVIDERS PAYERS Source: www.changehealth
Slide 12: Change Healthcare Drives Transformation
Change Healthcare Drives Transformation Accelerate the transition to a value-based healthcare system Address healthcare system inefficiencies Drive improved outcomes 12
Slide 13: Recent Challenges
Recent Challenges Less profitable Moderation Customer Impact of generic of buy side pricing customer launches pharmaceutical sell side consolidation compared to prior manufacturer environment years pricing trends 13
Slide 14: Why Invest In McKesson?
Why Invest In McKesson? Long-Term Growth Opportunity Well-positioned Operational Customer-first Experienced Disciplined businesses excellence focus management capital team deployment Pathway to Double-Digit Adjusted EPS Growth 14
Slide 15: Our People, Our Purpose
Our People, Our Purpose Our work is about helping our customers improve lives. It starts with a relentless focus on helping our customers and partners solve their toughest challenges. It starts with creating lasting value across the pharmaceutical and medical supply chain. It starts with the scale a
Slide 16: McKesson Distribution Solutions
McKesson Distribution Solutions Paul Julian Executive Vice President Group President Distribution Solutions
Slide 17: Distribution Solutions: Core Operations
Distribution Solutions: Core Operations North America Medical-Surgical Global Pharmaceutical Distribution and Celesio Procurement Distribution and Services and Sourcing Services Supplies Provides medical- Provides Enterprise-wide pharmaceuticals surgical supplies to pharmaceutical sourcing and and t
Slide 18: Distribution Solutions Leadership Team
Distribution Solutions Leadership Team Paul Julian EVP & Group President Distribution Solutions 21 years Brian Tyler Stanton McComb Mark Walchirk Nick Loporcaro Chairman President President President Celesio Management Board McKesson Medical-Surgical U.S. Pharmaceutical McKesson Specialty Health 20
Slide 19: FY17 Milestones
FY17 Milestones >$24B in Specialty revenues1 Expanded retail ownership in in Fiscal 2017 Canada and Europe ClarusONE established and Grew iKnowMed #1 fully operational Health Mart ranked EHR platform for store count to oncologists and hematologists for >4,800 sixth consecutive year2 stores Integrati
Slide 20: Acquisitions Closed In Fiscal 2017
Acquisitions Closed In Fiscal 2017 McKesson Vantage Oncology: Leading national provider of integrated cancer care Specialty Health Biologics: Leading independent oncology-focused specialty pharmacy McKesson Canada Rexall: Canadian national retail pharmacy chain with ~450 stores United Drug: Pharmace
Slide 21: FY17 Achievements
FY17 Achievements U.S. Pharmaceutical McKesson Medical-Surgical • Maintained share position in independent retail • Year-over-year growth driven by lab, physician despite pricing variability office and home care • Expanded Health Mart franchise to >4,800 stores • Completed acquisition of Labsco, exp
Slide 22: Global Healthcare Markets Are Growing
Global Healthcare Markets Are Growing Market Overview1 North America Europe Global • Pharmaceutical spend • Pharmaceutical spend • Global pharmaceutical market expected to grow expected to grow will grow approximately approximately 6-9% CAGR approximately 1-4% CAGR 4-7% CAGR 2016-2021 2016-2021 2016
Slide 23: Global Distribution Footprint
Global Distribution Footprint United States + Canada + Western Europe Best-in-class distribution network Leading distribution network Supply pharmacies, hospital and alternate sites Supply pharmaceuticals and Reach spans all provinces and medical-surgical supplies territories France National Re-Dist
Slide 24: Driving Operational Excellence
Driving Operational Excellence 99.98% Order Accuracy Across North America Distribution and Services ~$220M in Six Sigma-Related Savings Across North America ~11% Increase 99.90% in Lines Processed Across Inventory Accuracy Across U.S. Pharmaceutical International Distribution and Services ~5% Increa
Slide 25: Committed To Excellence In Retail Pharmacy
Committed To Excellence In Retail Pharmacy A Global Footprint Growth in FY17 15,000+ pharmacies globally • Rexall: Acquired ~450 Rexall retail pharmacies in Canada • Europe: >8,100 owned and banner • Sainsbury’s: Acquired ~280 retail • Canada: ~2,500 owned and banner pharmacies in the U.K. • United
Slide 26: Established Global Private Label Platform
Established Global Private Label Platform Provides Opportunities for Strategic Expansion Over-the-Counter Medical Supplies Generics Increase penetration in new Advance opportunities in Grow through new and existing geographies global medical-surgical molecules and partnership and categories supplied
Slide 27: Specialty Medicine Spending Continues To Rise
Specialty Medicine Spending Continues To Rise1 New Therapies are Increasingly Specialty / Orphan Drugs Payers focused on Oncology ensuring availability, therapies but with a close eye on comprise 25% quality and cost of drug pipeline Accelerating pace of Biosimilar impact development in expected to
Slide 28: How McKesson Defines Specialty Revenue
How McKesson Defines Specialty Revenue >30% 3-Year Revenue CAGR To FY171 Complex Specialty Therapies Two businesses with McKesson Specialty Health broad solutions McKesson Plasma & Biologics Distribution Services Manufacturer Solutions Provider Solutions • Specialty drug distribution • Specialty pha
Slide 29: Supporting Customers With Technology
Supporting Customers With Technology McKesson Rx Technology Solutions aligns an existing technology portfolio to enhance our core value proposition MDS LEGACY ACQUISITION McKesson Pharmacy RelayHealth CoverMyMeds Technology & Pharmacy Services • Pharmacy management and • Pharmacy claims management •
Slide 30: McKesson Distribution Solutions
McKesson Distribution Solutions Comprehensive Solutions & Services Across the Supply Chain Customer-First Focus Delivering Operational Excellence Fostering Innovation Driving Scale & Growth 30
Slide 31: U.S. Pharmaceutical
U.S. Pharmaceutical Mark Walchirk President U.S. Pharmaceutical
Slide 32: U.S. Pharmaceutical
U.S. Pharmaceutical Broad Value Proposition Will Drive Continued Success Customer-First Focus Delivering Operational Excellence • Improving Health Mart access to lives • Industry-leading automation and • Coupling unique services with service levels distribution expertise to add value • Efficient, hi
Slide 33: Industry Landscape
Industry Landscape Healthcare Continues to be a Dynamic and Growing Industry 5.4% Total Market Sales CAGR ~4.5 Billion 2016 to 20211 Prescriptions Dispensed in 20162 Generic Launches 40-45 Innovative Medicines $103 Billion to launch annually from 2017 to 20212 of brand sales at risk from 2017 to 202
Slide 34: Leading Portfolio Of Services And Products
Leading Portfolio Of Services And Products Comprehensive Suite of Offerings in All Segments National Retail Health Systems Independent & Small Pharmacy Chain Pharmacy Customer-Driven Solutions 34
Slide 35: Delivering Value For National Retail Pharmacies
Delivering Value For National Retail Pharmacies Strong Value Proposition Drives Long-Term Relationships “ Market-leading supply chain McKesson dedicates itself to drives efficiencies excellence in distribution, its core business. Key measures are continually put into place to improve efficiency and
Slide 36: Addressing Health Systems' Complex Needs
Addressing Health Systems’ Complex Needs Customer-Focused Solutions Driving Success “ Operational excellence McKesson studied the company and came in with ideas that reflected a throughout supply chain good depth of understanding of the book of business. By including all four areas of distribution,
Slide 37: Spotlight: Enterprise-Wide Customized Solutions For Health Systems
Spotlight: Enterprise-Wide Customized Solutions For Health Systems U.S. McKesson Pharmaceutical Medical-Surgical McKesson Plasma McKesson & Biologics Specialty Health • Inventory Management • Analytics and Reporting • Ambulatory / Specialty • Integration with Automation Consultation Vendors • Specia
Slide 38: Largest Network Of Independent Pharmacies
Largest Network Of Independent Pharmacies Health Mart Now >4,800 Independent Pharmacies1 Focused Strategy Providing customers access to the “ Networks right networks and support for improving STAR ratings I looked at what the other wholesalers were offering and they Patients Driving prescription vol
Slide 39: ClarusONE Sourcing Services Driving Value
ClarusONE Sourcing Services Driving Value… Co-sourcing partnership leveraging joint scale Became fully operational in late Fiscal 2017 Experienced team established in London Ahead of expectations and both parties pleased with progress Approaching market with combined generic volumes Intent to expand
Slide 40: Complementing Established Generic Programs
…Complementing Established Generic Programs OneStop Proprietary Generics Program • Private label World-Class Strong offering focused on mature molecules Global Compliance Sourcing and • Operational for more than a Procurement decade • Continued opportunities for Competitive Pricing, Choice and Indus
Slide 41: Differentiated Pricing Model And Programs
Differentiated Pricing Model And Programs Multi-Year Initiative Brand Generic Specialty Pharmaceuticals Pharmaceuticals Pharmaceuticals Biosimilars Over-the-Counter Distribution and Sourcing and Manufacturer Distribution, Products and services distribution via services, services and services proprie
Slide 42: Building Upon Plasma And Biologics Footprint
Building Upon Plasma And Biologics Footprint Pending BDI Pharma Acquisition, a Leading Plasma Distributor Access to New Growth Value Proposition for Channels Customers Scale Access to growth markets such Programs serving specialty Enhanced plasma scale in as specialty pharmacy and pharmacies and rar
Slide 43: Continued Investments In Established Distribution Network
Continued Investments In Established Distribution Network NRDC Model Technology Ongoing Investment National Increased automation Enhancing re-distribution center and productivity state-of-the-art operational since FY13 distribution network Investments in Automation Drive Operational Excellence and P
Slide 44: Our People
Our People United around our commitment to Better Health 44
Slide 45: U.S. Pharmaceutical
U.S. Pharmaceutical Committed to Delivering Better Health Customer-First Focus Delivering Operational Excellence Fostering Innovation Driving Scale & Growth 45
Slide 46: McKesson Specialty Health
McKesson Specialty Health Nick Loporcaro President McKesson Specialty Health
Slide 47: McKesson Specialty Health
McKesson Specialty Health Deep Expertise Across Specialty Portfolio Customer-First Focus Delivering Operational Excellence • Aligned our organization to a customer- centric approach • Providing new technologies to further optimize distribution and patient • Expanding our suite of solutions to suppor
Slide 48: U.S. Specialty Market Landscape
U.S. Specialty Market Landscape Well Positioned for Continued Growth Specialty Share of Drug Spend 2011-20211 46% 2016 Specialty Drug Market1 ~11% annual growth* 36% *Represents 80% of total U.S. pharmaceutical spend growth 24% New drug launches across specialties Drivers New indications for markete
Slide 49: FY17 Achievements
FY17 Achievements Thriving in an Increasingly Complex Market Integrated Biologics Specialty Distribution and Vantage Oncology Brought 17 new therapies to market >1.3M Biologics Specialty prescriptions Pharmacy Clinical Research dispensed 38 limited distribution >1,500 Trials nationwide 8 exclusive n
Slide 50: Market Leadership In Community Oncology
Market Leadership In Community Oncology Services Currently serving >3,700 oncologists • Clinical research • Specialty pharmacy • In-office dispensing • Payer contracting • Management services • Technology 40% Year-over-year physician growth in The US Oncology Network “The US Oncology Network provide
Slide 51: Strengthening Our Footprint In Other Specialties
Strengthening Our Footprint In Other Specialties Adding to Our Portfolio with Pending intraFUSION Acquisition Currently serving >5,300 specialists New infusion management offering • ~100 infusion centers • >36k infusion patients/year Rheumatology Locations Gastroenterology Locations Ophthalmology/Re
Slide 52: Innovative Technology Solutions
Innovative Technology Solutions Delivered at the Point of Care Practice InsightsSM TotalViewSM Generation 2 My Care PlusSM Analytics & Reporting Revenue Cycle Reporting Patient Engagement iKnowMedSM Generation 2 Clear Value PlusSM Lynx Mobile® Electronic Health Records Clinical Regimen Support Inven
Slide 53: Comprehensive Solutions For Payers
Comprehensive Solutions For Payers Supporting Value-Based Care Value-Based Care Leadership Commercial Payers MSH supports >30 practices selected to >20 value-based agreements participate in CMS’ Oncology Care Model Radiation-specific programs The USOncology Network participation >800 Physicians Valu
Slide 54: Case Study: Zejula
Case Study: Zejula Meeting Manufacturers’ Needs Patient Support Hub US Oncology Research Comprehensive patient support Pivotal trial for FDA approval program Co-Pay Assistance Biologics Program Commercial fulfillment Pharmacy benefit assistance program Patient Assistance Drug Distribution Program Sp
Slide 55: Driving Better Patient Outcomes
Driving Better Patient Outcomes Throughout the Specialty Ecosystem 55
Slide 56: McKesson Specialty Health
McKesson Specialty Health Committed to Delivering Better Health Customer-First Focus Delivering Operational Excellence Fostering Innovation Driving Scale & Growth 56
Slide 57: McKesson Medical-Surgical
McKesson Medical-Surgical Stanton McComb President McKesson Medical-Surgical
Slide 58: McKesson Medical-Surgical
McKesson Medical-Surgical Extending Capabilities Across Alternate Care Sites Customer-First Focus Delivering Operational Excellence • Best-in-class net promoter scores from alternate care providers • Continuously improving distribution network efficiencies • Expanded services and technology offering
Slide 59: Leader Across Alternate Site Markets
Leader Across Alternate Site Markets Meeting Customer Needs Across a Diverse Landscape Physician Office Emergency Hospice Durable Medical Lab Testing Room Equipment Home Health Rehabilitation Long-Term Care Ambulatory Urgent Care Agencies Facilities Surgery Centers Market Leader for the Ambulatory a
Slide 60: Medical-Surgical Distribution Network
Medical-Surgical Distribution Network Significant Scale and Reach Specializing in Non-Acute Markets Distribution Center 60
Slide 61: Poised To Meet Changing Market Needs
Poised To Meet Changing Market Needs Competing Pressures Make McKesson Partner of Choice Heightened Rising Regulatory Patient Pressures Volumes Increasing Higher Reimbursement Operating Pressures Costs Partnership with McKesson 61
Slide 62: Our Promise To Our Provider Customers
Our Promise To Our Provider Customers McKesson Delivers… Solutions to Support Every More Products, Distribution You Enhance Your Step of the Way More Choice Can Count On Business 100k+ SKUs National See, Switch & Clinical and IT Footprint Save™ Resources Brand Patient Home MedTrainer® Private Label
Slide 63: Our Promise To Our Manufacturers
Our Promise To Our Manufacturers McKesson Delivers… Data & Analytics Access to Markets Supply Chain Innovative Quality & Growth Efficiencies Merchandising Programs One Distributor for All Supply Chain Savings Digital Marketing Market Insights Alternate Site Markets with Scale OnTarget™ QA & Complian
Slide 64: Investing For Growth
Investing For Growth Leveraging Areas of Strength as Markets Shift and Expand Health Systems Rx & Vaccines Surgery Centers Expanding Partnering with Customized support model U.S. Pharmaceutical; flu product and vaccines distribution service solutions McKesson Brands E-Commerce Lab and Global Sourcin
Slide 65: Private Label Growth
Private Label Growth Expanding Support and Product Offering for McKesson Brands Scale Expansion Growth 65
Slide 66: Formula For Success
Formula For Success Leveraging Scale Increasing Profitability Growing Supplier Markets Value 66
Slide 67: Formula For Success
Formula For Success Steady Revenue Growth Leveraged to 2.5x Adjusted Operating Profit CAGR1 1For the period of Fiscal 2014 to Fiscal 2017. Adjusted operating profit excludes amortization of acquisition-related intangible assets, acquisition expenses and related adjustments and restructuring charges
Slide 68: McKesson Medical-Surgical
McKesson Medical-Surgical Committed to Delivering Better Health Customer-First Focus Delivering Operational Excellence Fostering Innovation Driving Scale & Growth 68
Slide 69: Question and Answer
MSKESSON Question and Answer
Slide 70: McKesson
MCKESSON
Slide 71: McKesson Canada
McKesson Canada Domenic Pilla CEO McKesson Canada
Slide 72: McKesson Canada
McKesson Canada Unmatched Capabilities and Unique Offerings Driving Growth Customer-First Focus Delivering Operational Excellence • Expand solutions across core businesses • Network optimization • Enhance capabilities to support • Leader in pharmaceutical distribution specialty growth • Enhance reta
Slide 73: Market Dynamics
Market Dynamics Macro Trends in Canada Mirror Global Healthcare Landscape Aging & Chronic Affordability Quality Specialty Conditions Age group 65 years $200-$300 billion Ranked 10 out of >30% of total and older growing annual health budget 11 in healthcare drug spend in 20164 4x faster than shortfal
Slide 74: Growing Through Our Integrated Ecosystem
Growing Through Our Integrated Ecosystem Retail Pharmacies Providers Hospitals Patients Specialty & Payers Infusion 74
Slide 75: Distribution Growth Supported By Operational Excellence
Distribution Growth Supported By Operational Excellence • Deliver to majority of pharmacies and hospitals • Distribution network optimization • Continued formulary growth • New specialty distribution service 75
Slide 76: Expand Pharmacy Solutions
Expand Pharmacy Solutions Local Access to Serve ~80% of Canadians1 Owned Pharmacies Banner and Franchise ~450 owned pharmacies >2,000 banners and franchises 1Based on the share of Canadian population within three miles of a McKesson owned, banner or franchise pharmacy 76
Slide 77: Enhance Specialty Offering
Enhance Specialty Offering Specialty pharmacy provider Leading Position with Delivery of infusion services Full Suite of Assets Manufacturer solutions National Key Priorities network of Expand specialty infusion clinics pharmacy scale Grow clinic network Enhance payer and Own 13 specialty pharmacies
Slide 78: Domestic And Global Synergies
Domestic And Global Synergies Leveraging Capabilities Across the Global Organization Global Private Shared Technology Specialty Retail Sourcing Label Services Core Capabilities 78
Slide 79: McKesson Canada
McKesson Canada Committed to Delivering Better Health Customer-First Focus Delivering Operational Excellence Fostering Innovation Driving Scale & Growth 79
Slide 80: Celesio
Celesio Brian Tyler Chairman Celesio Management Board
Slide 81: Celesio Core Operations
Celesio Core Operations Highlights • Extensive network across 13 countries in Europe • Leader in pharmaceutical distribution • Strong retail presence with more than 8,100 owned and banner pharmacies • Relatively fragmented industries • Population of nearly 350 million in the markets we serve1 • Mana
Slide 82: European Pharmaceutical Industry Landscape
European Pharmaceutical Industry Landscape Overall European Market1 Sales (USD Billion) $250 Stable, Growing Market $200 Increasing Generics Penetration $150 Demographics, Chronic $100 Disease and New Therapies $50 $0 2012 2011 2013 2014 2015 2016 2017 2018 2019 2020 2021 1QuintilesIMS Health Market
Slide 83: U.K. Regulatory & Political Environment Impacting Celesio Results
U.K. Regulatory & Political Environment Impacting Celesio Results NHS Funding Reimbursement Cuts Brexit New Payment Structure 83
Slide 84: Celesio
Celesio Strong Platform for Growth Customer-First Focus Delivering Operational Excellence • Expanding retail pharmacy footprint and services across Europe with EPN • Six Sigma now implemented and initiative driving savings • Enhancing capabilities to support • Focus on distribution network specialty
Slide 85: European Pharmacy Network (EPN)
European Pharmacy Network (EPN) Strong Network of Owned, Franchise and Independent Pharmacies Owned Franchise Independent Pharmacies Partner Pharmacies Consistent European brand Common store appearance Lloyds’ concept elements A differentiated pharmacy New technology and product customized for pharm
Slide 86: Broad Retail Footprint Across Europe
Broad Retail Footprint Across Europe IRELAND NORWAY UNITED KINGDOM SWEDEN BELGIUM FRANCE NETHERLANDS GERMANY ITALY PORTUGAL Note: Brocacef is a joint venture where Celesio has an equity interest of 45%. 86
Slide 87: EPN Channel Helps Build Momentum In Private Label
EPN Channel Helps Build Momentum In Private Label Private Label Revenue Total1 Global Initiatives NorthStar launch in the U.K. +96% European Initiatives Expand range of standardized central products in OTC, First Aid, Medical Devices and Hygiene for all markets Local Initiatives Product development
Slide 88: Focus On Operational Excellence
Focus On Operational Excellence France NRDC >1% increase in on track automation rate 99.90% Operational Multi-year ERP inventory accuracy Excellence investment 200+ trained Six 2% improvement Sigma resources in supply chain cost per unit 88
Slide 89: Investing In Innovation
Investing In Innovation Online Hospital Prescription Digital Homecare Doctor Solutions Assembly Channel Solutions Innovation driving Unique value Automated Harmonize and M&A investment in connected care for proposition to assembly system for expand e-commerce U.K. to complement patients in Sweden ho
Slide 90: Digital Channel As A Growth Driver
Digital Channel As A Growth Driver Expanding Customer Digital Experience in Owned Retail • Continuing to invest in e-commerce capabilities in retail markets • Strengthens Lloyds brand awareness • Aligns with market e-commerce trends • Driving online doctor programs to allow connectivity in patient c
Slide 91: Capital Deployment Drives Growth In Adjacent Markets
Capital Deployment Drives Growth In Adjacent Markets Closed multiple MDD Pharma acquisitions in FY17, Automated, central fill platform in Belgium including: • Current focus in long-term care • Sainsbury’s pharmacies • Leverages our LloydsPharmacy network • United Drug • Key entry-point to Belgian ho
Slide 92: Celesio
Celesio Committed to Delivering Better Health Customer-First Focus Delivering Operational Excellence Fostering Innovation Driving Scale & Growth 92
Slide 93: Question and Answer
MSKESSON Question and Answer
Slide 94: Financial Update
Financial Update James Beer Executive Vice President Chief Financial Officer
Slide 95: McKesson Drives Sustained Value Creation
McKesson Drives Sustained Value Creation Attractive Healthcare Market Well-Positioned and Diversified Businesses • Favorable demographics in North America and Europe • Continuing investment focus on our leading specialty business • Healthcare reform agenda concerned with access, affordability and qu
Slide 96: Unlocking Value Of Technology Businesses
Unlocking Value Of Technology Businesses McKesson Technology Solutions Complementary capabilities, Leading, scaled provider delivering financial, operational and of software and analytics, network clinical benefits to payers, providers solutions and technology-enabled and consumers services McKesson
Slide 97: Change Healthcare Illustrative Timeline
Change Healthcare Illustrative Timeline Tax-Free Distribution to McKesson Shareholders Change Opportunity for Healthcare Blackstone created secondary offering 3/2017 3/2019 9/2018 9/2019 IPO targeted, if Likely earliest conditions are opportunity for appropriate McKesson to initiate a tax-free distr
Slide 98: Distribution Solutions
Distribution Solutions Scaled and Diversified Portfolio with Multiple Growth Levers 98
Slide 99: FY17 Distribution Solutions At A Glance
FY17 Distribution Solutions At A Glance Brand, Specialty, Generic, Biosimilar, OTC Opportunities >$4B in Acquisitions and Strategic Partnerships • Global Retail Pharmacy Footprint Now >30% >15k Stores Specialty • Deep Customer Revenue and Manufacturer FY17 Three-Year CAGR Relationships • Continued S
Slide 100: Strong Operating Cash Flows
Strong Operating Cash Flows (in $ Billions) $5.0 Operating Cash Flow Operating Cash Flow Adjusted Net Income Attributable to McKesson Net Income Attributable to McKesson $4.0 FY16 FY16 – FY17 – FY17 $3.0 29% Driven by Working Capital Improvements, Net of $2.0 Lower Adjusted Earnings $1.0 FY11 FY12 F
Slide 101: Strong Balance Sheet And Capital Deployment
Strong Balance Sheet And Capital Deployment Financial Capital Cash Flow Discipline Structure Liquidity Fulfilled Strong balance History of Diversified debt commitment to sheet and strong operating portfolio and de-lever after laddered cash flow commercial paper Celesio debt maturity growth access ac
Slide 102: FY18 Capital Deployment Approach
FY18 Capital Deployment Approach Continuing Our Portfolio Approach to Capital Deployment • Invest $650 to $750 million in internal investments • M&A to accelerate key focus areas • Return cash to shareholders via buybacks • Pay dividend • Maintain investment-grade rating 102
Slide 103: Financial Drivers
Financial Drivers A Pathway to Double-Digit Adjusted EPS Growth Operational Strategic Execution Initiatives • Organic growth • Channel influence • ClarusONE • Global scale • Private label • Specialty offerings • M&A synergies • Retail expansion • Technology infrastructure, analytics, • Manufacturer
Slide 104: McKesson: Committed To Delivering Better Health
McKesson Committed To Delivering Better Health Attractive Healthcare Market Well-Positioned and Diversified Business Experienced and Tenured Management Team Portfolio Approach to Capital Deployment 104
Slide 105: Question and Answer
MSKESSON Question and Answer
Slide 106: McKesson
MCKESSON
Slide 107: We Expect Fiscal 2018 Adjusted Earnings Per Diluted Share of $11.75 to $12.45
We Expect Fiscal 2018 Adjusted Earnings Per Diluted Share of $11.75 to $12.45 The Fiscal 2018 outlook is based on the following key assumptions and are subject to the risk factors outlined in our press release on May 18, 2017: • Distribution Solutions revenue growth is expected to increase by mid-si
Slide 108: We Expect Fiscal 2018 Adjusted EPS (continued)
We Expect Fiscal 2018 Adjusted Earnings Per Diluted Share of $11.75 to $12.45 (continued) The Fiscal 2018 outlook is based on the following key assumptions and are subject to the risk factors outlined in our press release on May 18, 2017: • We expect our interest expense to decrease by approximately
Slide 109: McKesson
MCKESSON
Slide 110: (a) Certain computations may reflect rounding adjustments
(a) Certain computations may reflect rounding adjustments 110
Slide 111: (a) Certain computations may reflect rounding adjustments
(a) Certain computations may reflect rounding adjustments 111
Slide 112: (a) Certain computations may reflect rounding adjustments
(a) Certain computations may reflect rounding adjustments 112
Slide 113: (a) Certain computations may reflect rounding adjustments
(a) Certain computations may reflect rounding adjustments 113
Slide 114: (a) Our Distribution Solutions segment's noncontrolling interests primarily include the third-party equity interests …
(a) Our Distribution Solutions segment's noncontrolling interests primarily include the third-party equity interests related to Vantage Oncology Holdings, LLC and ClarusONE Sourcing Services, LLP. 114
Slide 115: Reconciliation of GAAP Segment Financial Results to Adjusted Earnings
MCKESSON Mc KES SON CORPORATION RECONCILIATION OF GAAP SEG MENT FINANCIAL RESULTS TO ADU USTED EARNINGS (NON-GAAP) RECAST FOR FISCAL 2011-2017 (unaudi sd) (in millions) ‘Yeat Ended March 31,2016 ‘Year Ended March 31,2015, ‘Year Ended March 31,2014 Hs Pecast secast As Precast Adjusted Adjusted Adjust
Slide 116: Reconciliation of GAAP Segment Financial Results to Adjusted Earnings
MCKESSON Mc KES SON CORPORATION RECONCILIATION OF GAAP § EG MENT FINANCIAL RESULTS TO ADU USTED EARNINGS (NON-GAAP) RECAST FOR FISCAL 2011-2017 {unsudl#) (in millions) ‘Yeat Ended March 31,2013 ‘Year Ended March 31,2012 ‘Yeat Ended March 31,2011 Bs Recast Bs Recast Ts Finest Adjusted Adjusted Adjust
Slide 117: Supplemental Non-GAAP Financial Information
MCKESSON 117 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION Inn effort to provide investors with adgitional information regarding the company's financial results as determined by generally accepted accounting principles (‘GAAP"), McKesson also presents the following non-GAAP measures in this document.
Slide 118: Supplemental Non-GAAP Financial Information (continued)
MCKESSON 118 SUPPLEMENT AL NON-GAAP FINANCIAL INF ORMATION (continued) « Constant Currency (Non-GAAP): To present our financial results on a constant currency basis, we convert current year period results of our operations in foreign countries, which are recorded in local currencies, into U.S. dolla