Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- McKesson Corp (MCK, Financial) reported record quarterly revenue of $93.7 billion, with a 7% increase in adjusted operating profit.
- The company raised its fiscal 2025 guidance for adjusted earnings per diluted share, reflecting confidence in its business outlook.
- Strong performance was noted in the US pharmaceutical segment, driven by increased prescription volumes and the onboarding of a new strategic partner.
- McKesson Corp (MCK) continues to expand its oncology platform, with significant growth in the US Oncology Network and strategic acquisitions.
- The company is making strategic investments in technology and modernization initiatives, expected to generate $250 million in benefits over the next five years.
Negative Points
- The Medical-Surgical Solutions segment experienced lower volumes in the primary care channel, impacting operating profit.
- There is variability and challenges in the Prescription Technology Solutions segment, with product launch delays and slower manufacturer program ramps.
- The company recorded a GAAP-only charge of $643 million related to the divestiture of its Canada-based Rexall and Well.ca businesses.
- McKesson Corp (MCK) faces ongoing challenges in managing costs and operational efficiencies amid market normalization post-COVID.
- The company anticipates continued variability in GLP-1 medication revenues, which could impact future financial performance.
Q & A Highlights
Q: Can you discuss the key drivers of growth in the US pharmaceutical segment, particularly in light of changes in Part D and strong volumes in Canada?
A: Britt Vitalone, CFO, explained that utilization trends have been consistent and growing year-over-year. The addition of a new strategic partner and growth in specialty capabilities, including oncology, have contributed to this growth. The oncology platform has expanded with 118 new providers, enhancing the segment's growth.
Q: There has been volatility in the RxTS and Medical segments. Can you explain why revenue guidance was lowered for RxTS but not for income?
A: Britt Vitalone noted that variability is driven by factors like product launch delays and supply shortages. The revenue guidance was adjusted due to delays in the 3PL business, which, while significant in revenue, contributes less than 5% to the segment's operating profit. Thus, the impact on income guidance was minimal.
Q: How do you plan to achieve the expected profitability in the Med-Surg segment, given the guidance implies a significant step-up in adjusted operating profit?
A: Britt Vitalone mentioned that the business saw slower volumes in primary care but performed better than expected in Q2. The company anticipates about $100 million in savings from initiatives in the second half, with modest growth expected outside these initiatives.
Q: With the acquisition of Florida Cancer Specialists, how will this impact US Oncology's market share and decision-making for future acquisitions?
A: Brian Tyler, CEO, stated that the acquisition will enhance US Oncology's market share, with a focus on providing accessible, high-quality care. Decisions on acquisitions are based on market dynamics and the ability to integrate practices into the network, leveraging best practices across sites.
Q: How does McKesson view the opportunity with biosimilars in the coming years?
A: Britt Vitalone highlighted that biosimilars offer clinical choice and better value for patients. McKesson sees opportunities in Part B, where they can leverage their capabilities to provide better margins compared to branded drugs, particularly in oncology and specialty areas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
