McKesson(MCK) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Company reported first quarter revenues of $79.3 billion, reflecting a 6% year-over-year growth [7][23] - Adjusted earnings per diluted share increased 8% to$ 7.88, exceeding original expectations [7][26] - Gross profit was $3.1 billion, an increase of 4%, primarily due to specialty distribution growth [23] - The company raised its full-year adjusted earnings per diluted share guidance from$ 31.25 to a new range of $31.75 to$ 32.55 [7][34] Business Line Data and Key Metrics Changes - US Pharmaceutical segment revenues were $71.7 billion, an increase of 7%, driven by increased prescription volumes, including GLP-1 medications [27][28] - Prescription Technology Solutions segment delivered revenues of$ 1.2 billion, with operating profit unchanged from the prior year [30] - Medical-Surgical solutions segment revenues were $2.6 billion, an increase of 1%, but operating profit decreased by 15% [31] - International segment revenues were$ 3.7 billion, an increase of 6%, with operating profit rising 13% [32] Market Data and Key Metrics Changes - GLP-1 medications generated revenues of $8.8 billion, a 26% increase year-over-year [27] - The Canadian business showed organic growth supported by stable pharmaceutical volume trends [13] - The primary care channel experienced a decline, impacting the Medical-Surgical segment [14][31] Company Strategy and Development Direction - The company is focused on becoming a diversified healthcare services provider, emphasizing technology investments to enhance product offerings and operational efficiencies [9][10] - A strategic alignment of oncology-related assets was announced to improve patient care experiences and streamline operations [15][16] - The company is committed to driving sustainable core growth in its distribution business despite market challenges [14][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth targets despite mixed segment results in the first quarter [20][34] - The company anticipates continued growth in the US Pharmaceutical segment, particularly in oncology and specialty pharmaceuticals [35][36] - Management acknowledged challenges in the Medical-Surgical segment due to market normalization post-COVID [14][41] Other Important Information - The Board approved a 15% increase in the quarterly dividend and an additional$ 4 billion share repurchase authorization [7][22] - The company is investing in AI and technology to improve operational efficiencies and customer experiences [19][44] Q&A Session Summary Question: Understanding the mix of services within access - Management explained that the mix of services shifted unexpectedly, impacting revenue [50] Question: Factors driving profit growth in the U.S. Pharma segment - Management indicated that growth in specialty and oncology areas would drive profit growth into the 8% to 10% range [54][56] Question: Changes in the MedSurg business and market dynamics - Management noted a significant decline in demand for COVID-related products and a general softness in primary care [58][59] Question: Impact of formulary changes on HUMIRA revenues - Management confirmed that a formulary change to biosimilars impacted revenues [66] Question: Product launch delays in Prescription Technology Solutions - Management acknowledged that product delays affected revenue guidance but expressed confidence in the broader service portfolio [68] Question: Opportunities for improving buy-side economics with GLP-1s - Management highlighted ongoing discussions with manufacturers to enhance service value and access [72] Question: Performance and future contributions from ClarusONE - Management expressed satisfaction with ClarusONE's performance and its role in providing competitive pricing and supply availability [75]