McKesson Corporation (MCK) Annual Evercore ISI HealthCONx Healthcare Conference (Transcript)

Summary of McKesson Corporation's Annual Evercore ISI HealthCONx Healthcare Conference Company Overview - Company: McKesson Corporation (NYSE: MCK) - Date of Conference: December 4, 2024 - Participants: Britt Vitalone (CFO), Elizabeth Anderson (Evercore ISI) Key Points Industry Focus - McKesson is focused on the healthcare services industry, particularly in Oncology and Biopharma Services [2][4][12]. Financial Performance - Q2 Earnings: Revenue growth of 21% year-over-year, adjusted operating profit growth of 7%, and adjusted earnings per share growth of 13% [4]. - Operating Cash Flow: Approximately $2.1 billion** with free cash flow of about **$ 1.9 billion [4]. - Tax Rate Guidance: Anticipated tax rate of 17% to 19% for the full year, with a higher rate of 23% to 26% expected in Q3 [5][6]. Growth Strategies - Continued investment in automation and AI to enhance customer service and operational efficiency [3][26]. - Focus on U.S. Pharma business diversification, including partnerships and capabilities in oncology [8][12]. - Biosimilars: 61 biosimilars developed, with 41 launched, providing more clinical choices and cost opportunities [14][15]. Oncology and Biopharma Services - Oncology revenue projected at $35 billion** this year, with higher growth and margin capabilities [11]. - Clinical trial management has seen a **25%** increase in patient accruals this year [10]. - The U.S. Oncology network has grown to over **2,750 providers** [9][40]. MedSurg Business - Long-term growth target of **10% to 12%** AOI, with a focus on following patient care trends outside hospital settings [17][18]. - Announced **$ 100 million in cost savings through operational alignment and efficiency improvements [21][23]. International Business - Strong growth in Canada, leveraging distribution services and sourcing operations [30][32]. - Planned divestiture of Rexall to refocus on distribution capabilities [32]. Capital Deployment - Prioritization of growth in high-margin areas like oncology and biopharma services, alongside returning capital to shareholders through dividends and share repurchases [63][65]. - Recent 15% increase in dividends approved by the board [65]. Supply Chain and Sourcing - ClarusONE sourcing engine enhances supply chain efficiency and ensures product availability [47][49]. - Focus on quality and diversification of suppliers to mitigate risks from potential trade policy changes [52][53]. Data and Technology - Emphasis on leveraging data from the Relay network to enhance clinical outcomes and support drug development [72][75]. - AI and automation are being utilized for working capital management and improving customer experience [26][28]. Competitive Landscape - McKesson maintains strong relationships with national retail and independent pharmacies, focusing on creating value through partnerships and efficiencies [68][69]. Investor Insights - The growth potential and differentiation of McKesson's oncology and biopharma services platforms may not be fully appreciated by investors [72][74]. Conclusion McKesson Corporation is strategically positioned in the healthcare services industry, focusing on growth through innovation, partnerships, and operational efficiencies. The company is committed to enhancing shareholder value while navigating the complexities of the healthcare landscape.