Bank of America Merrill Lynch 2013 Health Care Conference

Transcription

1 Bank of America Merrill Lynch 2013 Health Care Conference May 15, 2013 Jeff Campbell Executive Vice President and Chief Financial Officer

2 Forwardlooking Statements Some of the information in this presentation is not historical in nature and may constitute forwardlooking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of These statements may be identified by the use of forwardlooking terminology such as believes, expects, anticipates, may, will, should, seeks, approximately, intends, plans, estimates, or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forwardlooking statements. These forwardlooking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied by such statements. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, those described in the Company s annual, quarterly and current reports (i.e., Form 10K, Form 10Q and Form 8K) as filed or furnished with the Securities and Exchange Commission (SEC). You are cautioned not to place undue reliance on any such forwardlooking statements, which speak only as of the date such statements were first made. To the degree financial information is included in this presentation, it is in summary form only and must be considered in the context of the full details provided in the Company s most recent annual, quarterly or current report as filed or furnished with the SEC. The Company s SEC reports are available at under the Investors tab. Except to the extent required by law, the Company undertakes no obligation to publicly release the result of any revisions to these forwardlooking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events. GAAP / NonGAAP Reconciliation In an effort to provide additional and useful information regarding the Company s financial results and other financial information as determined by generally accepted accounting principles (GAAP), certain materials presented during this event include nongaap information. The rationale for management s use of nongaap information, a reconciliation of that information to GAAP, and other related information is available in the supplemental material attached as an appendix to this presentation and posted to under the Investors tab. 2

3 McKesson Overview America s oldest and largest healthcare services company Founded in 1833 Ranked 14 th on Fortune s list with 122 billion in revenues Headquartered in San Francisco More than 43,000 employees Two segments: Distribution and Technology Together with our customers and partners, we are creating a sustainable future for healthcare. Together we are charting a course to better health. 3 Unless indicated otherwise, presentation reflects results as of FYE13

4 Helping Our Customers Achieve Better Health On Three Dimensions 4

5 We Have A Track Record Of Steady Adjusted EPS Growth FY09 FY13 5 Reflects nongaap information calculated on an Adjusted basis. A reconciliation to GAAP is available in the appendix to this presentation and on the Company s website under the Investors tab.

6 We Use A Portfolio Approach To Deploy Capital And Create Shareholder Value Billions Share Repurchases 6.0 Internal Capital Spending 2.0 s Billion of Capital Deployed from FY09 FY13 Value creating acquisitions Measured share repurchase over time Internal capital spending Dividend policy periodically reviewed 6 Financial strength and flexibility to continue to execute our strategy

7 McKesson Drives Sustained Value Creation Attractive markets Public policy agenda supports greater access and improved efficiency Demographics drive longterm demand Well positioned businesses with margin expansion opportunities Broad value proposition with focus on higher margin products and services drives longterm margin growth in distribution segment Diversified technology segment positioned for steady longterm growth Unique value propositions linking distribution and technology segments Strong balance sheet and solid liquidity position used for a portfolio approach to capital deployment Experienced and tenured management team with a steady track record of delivering results 7

8 Bank of America Merrill Lynch 2013 Health Care Conference May 15, 2013 Jeff Campbell Executive Vice President and Chief Financial Officer

9 Appendix

10 GAAP/Adjusted (NonGAAP) Reconciliation McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NONGAAP) FOR FISCAL 2009 THROUGH 2013 (unaudited) (in millions, except per share amounts) As Reported (GAAP) of Intangibles Year Ended March 31, 2013 Expenses and Litigation Adjusted (NonGAAP) Revenues 122, ,455 Gross profit 6, ,000 Operating expenses (4,669) 199 (9) 72 (4,407) Other income, net Impairment of an equity investment (191) (191) Interest expense (240) 11 (229) Income from continuing operations before income taxes 1, ,208 Income tax (expense) benefit (581) (78) (6) (27) (692) Income from continuing operations 1, (4) 45 1,516 Diluted earnings per common share from continuing operations (a) (0.02) As Reported (GAAP) of Intangibles Year Ended March 31, 2012 Expenses and Litigation Adjusted (NonGAAP) Revenues 122, ,734 Gross profit 6, ,587 Operating expenses (4,418) (4,067) Other income, net Interest expense (251) (251) Income from continuing operations before income taxes 1, ,290 Income tax (expense) benefit (516) (72) (11) (89) (688) Income from continuing operations 1, , Diluted earnings per common share from continuing operations (a) (a) Certain computations may reflect rounding adjustments.

11 GAAP/Adjusted (NonGAAP) Reconciliation McKESSON CORPORATION RECONCILIATION OF GAAP OF GAAP OPERATING RESULTS TO TO ADJUSTED EARNINGS (NONGAAP) FOR FISCAL 2009 THROUGH FOR FISCAL SIX MONTHS 2009 THROUGH ENDED 2013 SEPTEMBER 30, 2012 (unaudited) (in (in millions, except except per per share share amounts) As As Reported (GAAP) Year Year Ended March 31, 31, of of Intangibles Expenses and and Litigation Adjusted (NonGAAP) Revenues 112, , , ,455 Gross Gross profit profit 5,970 6, ,986 7,000 Operating Operating expenses expenses (4,149) (4,669) (9) (3,777) (4,407) Other Other income, income, net net 3635 (16) 2035 Interest Impairment expense of an equity investment (222) (191) 25 (197) (191) Interest Income expense from continuing operations before income taxes 1,635 (240) ,032 (229) Income Income tax (expense) from continuing benefit operations before income taxes (505) 1,919 (51) 215 (16) 2 (64) 72 (636) 2,208 Income Income tax from (expense) continuing benefit operations 1,130 (581) 81(78) 36 (6) 149(27) 1,396 (692) Income from continuing operations 1, (4) 45 1,516 Diluted earnings per common share from continuing operations (a) Diluted earnings per common share from continuing operations (a) (0.02) Year Ended March 31, 2010 Year Ended March 31, 2012 of Expenses and Litigation Adjusted As Reported of Expenses and Litigation Adjusted (GAAP) As Reported Intangibles (NonGAAP) (GAAP) Intangibles (NonGAAP) Revenues Revenues 108, , , ,734 Gross profit 5, ,697 Gross profit 6, ,587 Operating expenses (3,668) 97 (20) (3,591) Operating expenses (4,418) (4,067) Other income, net Other income, net Interest expense (187) (187) Interest expense (251) (251) Income from continuing operations before income taxes 1, (20) 1,962 Income from continuing operations before income taxes 1, ,290 Income tax (expense) benefit (601) (46) 8 (639) Income tax (expense) benefit (516) (72) (11) (89) (688) Income Income from from continuing continuing operations operations 1,263 1, (12) 60 1,323 1, Diluted Diluted earnings earnings per per common common share share from from continuing continuing operations operations (a) (a) (0.04) (a) Certain computations may reflect rounding adjustments.

12 GAAP/Adjusted (NonGAAP) Reconciliation McKESSON CORPORATION RECONCILIATION OF OF GAAP GAAP OPERATING RESULTS TO TO ADJUSTED EARNINGS (NONGAAP) FOR FISCAL 2009 THROUGH FOR FISCAL SIX MONTHS 2009 THROUGH ENDED 2013 SEPTEMBER 30, 2012 (unaudited) (in (in millions, except per per share amounts) As As Reported (GAAP) Year Ended March 31, of of Intangibles Expenses and Litigation Adjusted (NonGAAP) Revenues Revenues 106, , , ,455 Gross Gross profit profit 5,378 6, ,407 7,000 Operating Operating expenses expenses (4,182) (4,669) (9) (3,590) (4,407) Other Other income, income, net net Interest Impairment expense of an equity investment (144) (191) (144) (191) Interest Income expense from continuing operations before income taxes 1,064 (240) ,685 (229) Income from continuing operations before income taxes 1, ,208 Income tax (expense) benefit (241) (49) (182) (472) Income tax (expense) benefit (581) (78) (6) (27) (692) Income from continuing operations ,213 Income from continuing operations 1, (4) 45 1,516 Diluted earnings per common share from continuing operations (a) Diluted earnings per common share from continuing operations (a) (0.02) (a) Certain computations may reflect rounding adjustments. As Reported (GAAP) of Intangibles Year Ended March 31, 2012 Expenses and Litigation Adjusted (NonGAAP) Revenues 122, ,734 Gross profit 6, ,587 Operating expenses (4,418) (4,067) Other income, net Interest expense (251) (251) Income from continuing operations before income taxes 1, ,290 Income tax (expense) benefit (516) (72) (11) (89) (688) Income from continuing operations 1, , Diluted earnings per common share from continuing operations (a)

13 GAAP/Adjusted (NonGAAP) Reconciliation McKESSON CORPORATION Distribution Technology Corporate & Interest Expense RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NONGAAP) BY ADJUSTMENT TYPE FOR FISCAL 2009 THROUGH 2013 (unaudited) TOTAL Distribution Technology Corporate & Interest Expense TOTAL (in millions) Year Ended March 31, 2013 Year Ended March 31, 2012 Year Ended March 31, 2011 Year Ended March 31, 2010 Year Ended March 31, 2009 Distribution As Reported (GAAP): Revenues 119,054 3, , ,424 3, , ,889 3, , ,578 3, , ,568 3, ,632 Gross profit 5,439 1,545 6,984 5,057 1,510 6,567 4,565 1,405 5,970 4,219 1,457 5,676 3,955 1,423 5,378 Operating expenses (3,071) (1,252) (346) (4,669) (2,854) (1,151) (413) (4,418) (2,673) (1,108) (368) (4,149) (2,260) (1,077) (331) (3,668) (2,777) (1,096) (309) (4,182) Other income (expense), net (20) Impairment of an equity investment (191) (191) Operating pretax profit 2, (335) 2,159 2, (413) 2,170 1, (341) 1,857 1, (322) 2,051 1, (284) 1,208 Interest expense (240) (240) (251) (251) (1) (221) (222) (2) (2) (183) (187) 2 (4) (142) (144) Income from continuing operations before income taxes 2, (575) 1,919 2, (664) 1,919 1, (562) 1,635 1, (505) 1,864 1, (426) 1,064 Gross profit margin 4.57% 45.43% 5.70% 4.23% 45.62% 5.35% 4.19% 43.97% 5.33% 4.00% 46.64% 5.22% 3.82% 46.44% 5.04% Operating expenses as a % of revenues 2.58% 36.81% 3.81% 2.39% 34.77% 3.60% 2.45% 34.68% 3.70% 2.14% 34.48% 3.37% 2.68% 35.77% 3.92% Operating pretax profit as a % of revenues 1.85% 8.73% 1.76% 1.86% 11.00% 1.77% 1.74% 9.42% 1.66% 1.88% 12.32% 1.89% 1.12% 10.90% 1.13% Technology Corporate & Interest Expense TOTAL Distribution Technology Corporate & Interest Expense TOTAL Distribution Technology Corporate & Interest Expense TOTAL PreTax : Gross profit Operating expenses of acquisitionrelated intangibles Operating expenses 47 8 (64) (9) Other income (expense), net (16) (16) Interest expense expenses and related adjustments 47 8 (53) Operating expenses (20) (20) Litigation reserve adjustments (20) (20) total (52) (20) Adjusted (NonGAAP): Revenues 119,054 3, , ,424 3, , ,889 3, , ,578 3, , ,568 3, ,632 Gross profit 5,441 1,559 7,000 5,058 1,529 6,587 4,565 1,421 5,986 4,220 1,477 5,697 3,956 1,451 5,407 Operating expenses (2,806) (1,192) (409) (4,407) (2,561) (1,094) (412) (4,067) (2,349) (1,062) (366) (3,777) (2,210) (1,030) (351) (3,591) (2,234) (1,047) (309) (3,590) Other income (expense), net (20) Impairment of an equity investment (191) (191) Operating pretax profit 2, (398) 2,437 2, (412) 2,541 2, (355) 2,229 2, (342) 2,149 1, (284) 1,829 Interest expense (229) (229) (251) (251) (1) (196) (197) (2) (2) (183) (187) 2 (4) (142) (144) Income from continuing operations before income taxes 2, (627) 2,208 2, (663) 2,290 2, (551) 2,032 2, (525) 1,962 1, (426) 1,685 Gross profit margin 4.57% 45.84% 5.72% 4.24% 46.19% 5.37% 4.19% 44.48% 5.34% 4.00% 47.28% 5.24% 3.82% 47.36% 5.07% Operating expenses as a % of revenues 2.36% 35.05% 3.60% 2.14% 33.05% 3.31% 2.16% 33.24% 3.37% 2.09% 32.97% 3.30% 2.16% 34.17% 3.37% Operating pretax profit as a % of revenues 2.07% 10.91% 1.99% 2.10% 13.29% 2.07% 2.04% 11.36% 1.99% 1.93% 14.47% 1.98% 1.64% 13.41% 1.72% 13