McKesson Corporation · NYSE:MCK
McKesson — Q4 FY2019 Earnings Presentation
25 slides from McKesson's earnings presentation, May 8, 2019
Slide 1: McKesson Corporation Fiscal 2019 Financial Results
McKesson Corporation Fiscal 2019 Financial Results Fiscal 2020 Annual Outlook May 8, 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, as amended, that involve risk
Slide 3: Company Update
Company Update Solid Results Provide Improving Momentum Entering Fiscal 2020 Company Updates Business Summary • Renewed pharmaceutical distribution relationship with CVS • Q4 revenue growth of 2%2 and full-year revenue Health through June 2023 growth of 3% • Board of Directors formed the Compliance
Slide 4: Q4 and Full-Year Fiscal 2019 Items
Q4 and Full-Year Fiscal 2019 Items • Q4 GAAP loss per diluted share and full-year GAAP earnings per diluted share included after-tax net charges totaling ~$1.5 billion and ~$2.2 billion, respectively, or $7.63 and $11.00 per diluted share, respectively, reflecting non-cash goodwill and long-lived as
Slide 5: Condensed Consolidated Statement of Earnings
Condensed Consolidated Statement of Earnings Q4 and Full Year Fiscal 2019 Adjusted Results Q4 YoY Full Year YoY ($ in millions, except per share amounts) FY 2019 Change FY 2019 Change Revenues $52,429 2% $214,319 3% Gross Profit $2,996 -% $11,347 2% Operating Expenses ($2,078) 1% ($7,932) 4% Income
Slide 6: U.S. Pharmaceutical and Specialty Solutions
U.S. Pharmaceutical and Specialty Solutions Q4 and Full Year Fiscal 2019 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 2019 Change FY 2019 Change U.S. Pharmaceutical and Specialty Solutions Revenues $40,897 3% $167,763 3% Operating Profit $752 (1)% $2,520 (2)% Operating Margin 1.8
Slide 7: European Pharmaceutical Solutions
European Pharmaceutical Solutions Q4 and Full Year Fiscal 2019 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 2019 Change FY 2019 Change European Pharmaceutical Solutions Revenues $6,757 (6)% $27,242 - Operating Profit $23 (72)% $219 (36)% Operating Margin 0.34% (80) bp 0.80% (44)
Slide 8: Medical-Surgical Solutions
Medical-Surgical Solutions Q4 and Full Year Fiscal 2019 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 2019 Change FY 2019 Change Medical-Surgical Solutions Revenues $1,955 13% $7,618 15% Operating Profit $172 21% $605 11% Operating Margin 8.80% 57 bp 7.94% (29) bp • Q4 revenue gro
Slide 9: Other & Corporate
Other & Corporate Q4 and Full Year Fiscal 2019 Results Adjusted Results Q4 YoY Full Year YoY ($ in millions) FY 2019 Change FY 2019 Change Other Revenues $2,820 (6)% $11,696 (1)% Operating Profit $258 6% $995 7% Operating Margin NM NM NM NM Corporate Operating Loss ($179) (13)% ($555) 7% • Other inc
Slide 10: Cash
Cash Full Year Cash Balance Walk* Cash Dynamics ($ in millions) • Operating cash flow reflects strong working Balance at March 31, 2018 $ 2,672 Operating Cash Flow capital performance and timing 4,036 Capital Expenditures (557) Free Cash Flow 3,479 • Share repurchases of $1.6 billion Acquisitions (9
Slide 11: 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 May 8, 2019 press release, McKesson does not provide forward-looking guidance on a GAAP basis as the compan
Slide 12: 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 $13.
Slide 13: Fiscal 2020 Segment Adjusted Earnings Outlook
Fiscal 2020 Segment Adjusted Earnings Outlook Year-over-Year Percent Change Revenues Operating Profit Low- to mid-single digit Low- to mid-single digit U.S. Pharmaceutical and Specialty Solutions growth growth Low- to mid-single digit Low- to mid-single digit European Pharmaceutical Solutions growth
Slide 14: Fiscal 2020 Adjusted Earnings Assumptions
Fiscal 2020 Adjusted Earnings Assumptions ($ and shares in millions) FY20 Outlook Corporate Expenses $725 - $775 Income From Equity Method Investment Attributable $250 - $270 to McKesson’s Interest in Change Healthcare1 Interest Expense $245 - $265 Effective Tax Rate 18 -19% Net Income Attributable
Slide 15: Appendix
MCKESSON Appendix
Slide 16: Reconciliation of GAAP Amounts to Free Cash Flow
Reconciliation of GAAP Amounts to Free Cash Flow ($ in millions) FY 2019 FY 2018 YoY Change Major GAAP cash flow categories: Operating cash flow $ 4,036 $ 4,345 $ (309) Investing cash flow $ (1,381) $ (2,993) $ 1,612 Financing cash flow $ (2,227) $ (3,084) $ 857 Free cash flow (non-GAAP measure): Op
Slide 17: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q4 Fiscal 2019 Schedule 2A McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions, except per share amounts) note: Q1 will have small #'s in NGAAP Adjustments due to manual rounding adjustments in the NGA
Slide 18: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q4 Fiscal 2018 Schedule 2A (continued) Quarter Ended March 31, 2018 Amortization Acquisition- Restructuring of Acquisition- Related LIFO Inventory- Gains from and Asset Other Adjusted As Reported Related Expenses and Related Antitrust Legal Impairment Adjustments, Ear
Slide 19: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2019 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) Schedule 2B (unaudited) (in millions, except per share amounts) Change Year Ended March 31, 2019 Vs. Prior Year Amortization Acquisition- LIFO Restructu
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2018 Schedule 2B (continued) Year Ended March 31, 2018 Amortization Acquisition- of Acquisition- Related LIFO Inventory- Gains from Restructuring and Other Adjusted As Reported Related Expenses and Related Antitrust Legal Asset Impairment Adjustments,
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Q4 Fiscal 2019 and Q4 Fiscal 2018 Schedule 3A McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions) Quarter Ended March 31, 2019 Quarter Ended March 31, 2018 GAAP Non-GAAP Change Adjusted Adjust
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Full Year Fiscal 2019 and Full Year Fiscal 2018 Schedule 3B McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) (unaudited) (in millions) Year Ended March 31, 2019 Year Ended March 31, 2018 GAAP Non-GAAP Change Adjuste
Slide 23: Financial Statement Footnotes
Financial Statement Footnotes McKESSON CORPORATION FINANCIAL STATEMENT NOTES (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-in, first-out (“L
Slide 24: 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 25: 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, which is the same measure formerly designated Constant Currency. To present our financial results