McKesson Corporation 2015 Investor Day

Transcription

McKesson Corporation
2015 Investor Day
June 24, 2015
2015 Investor Day Agenda
Erin Lampert – Senior Vice President, Investor Relations
John Hammergren – Chairman and Chief Executive Officer
Paul Julian – Executive Vice President, Group President Distribution Solutions
Mark Walchirk – President, U.S. Pharmaceutical
Nick Loporcaro – President, McKesson Specialty Health
Alain Champagne – President, McKesson Canada
Stanton McComb – President, McKesson Medical-Surgical
Q&A: North America and Medical-Surgical Distribution and Services
Paul Julian – Executive Vice President, Group President Distribution Solutions
Marc Owen – Chairman, Celesio Management Board
Q&A: International Pharmaceutical Distribution and Services
Break
Pat Blake – Executive Vice President, Group President Technology Solutions
James Beer – Executive Vice President, Chief Financial Officer
Q&A: Wrap-Up
Closing Remarks
Forward-Looking Statements
Some of the information in this presentation is not historical in nature and may constitute forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the
use of forward-looking 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 forward-looking statements. These forward-looking 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 10-K, Form 10-Q and Form 8-K) as filed or furnished with the Securities and Exchange Commission (SEC). You
are cautioned not to place undue reliance on any such forward-looking 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 www.mckesson.com 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 forward-looking statements to reflect events or
circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
GAAP / Non-GAAP 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 non-GAAP
information. The rationale for management’s use of non-GAAP 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 www.mckesson.com under
the “Investors” tab.
Welcome
John Hammergren
Chairman and
Chief Executive Officer
McKesson’s Shared Value System
Who We Are
What We Do
How We Do It
McKesson Distribution
Solutions
Paul Julian
Executive Vice President
Group President Distribution Solutions
Distribution Solutions: Core Operations
North America
Pharmaceutical
Distribution
and Services
MedicalSurgical
Distribution
and Services
International
Pharmaceutical
Distribution
and Services
Pharmaceutical
distribution,
technology and
services in the U.S.
and Canada
Medical surgical
supplies distribution
and services in the
U.S.
Celesio
pharmaceutical
distribution
and retail
operations
Global
Procurement
and Sourcing
Enterprise-wide
sourcing
organization
$176B in revenues and $4.2B in adjusted
operating profit in FY15
Reflects non-GAAP information calculated on an Adjusted Earnings basis. A reconciliation to GAAP is available in the appendix to this presentation
and on the Company’s website under the “Investors” tab.
Distribution Solutions
FY15 Milestones
Delivered Strong Results Across Distribution Solutions
Operating
control
of
Celesio
PSS
integration
Meeting or exceeding
expectations
Continued
to add
new
physicians
December 2014
New
McKesson Global
Sourcing & Procurement
ranked
#
1
Oncology EHR2
Expanded
Health Mart from
Betterlife from Lloyds
Pharmacy wins
Store Design
of the Year1
iKnowMed
The
US Oncology
Network
Added
3,281
to
3,865
stores
200+
Canadian Banner Pharmacies
1Oracle
Retail Week Awards 2015 2Highest ranked EHR, 2014 Black Book Rankings for Oncologists and Hematologists
Driving Operational Excellence Across
Distribution Solutions In FY15
99.98%
order accuracy
across North America
Distribution and Services
~20%
increase
in lines processed
across U.S.
Pharmaceutical
~43K
orders processed daily
~5%
increase
in lines for medical and
surgical supplies
shipped
>2.2M
lines per day
across North America
Nearly
$200M
in Six Sigma-related
savings across
North America
International
Distribution and
Services
19%
increase in delivery
addresses served
99.91%
Inventory accuracy
Distribution Solutions Summary
Track record of strong financial performance across
the segment
Operational excellence is at the core of everything we do
Strong value proposition across all customer segments
Differentiated approach to working with manufacturing partners
on a global scale
Proven ability to successfully deliver value from acquisitions
Significant depth of leadership experience and management
bench strength
Distribution Solutions Leadership Team
Paul C. Julian
EVP, Group President
(19 years)
Brian Tyler
Stanton McComb
Saul Factor
President
North American Pharmaceutical
(18 years)
President
McKesson Medical-Surgical
(13 years)
President
Global Sourcing
(9 years)
Marc Owen
Jack Fragie
Chairman
Celesio Management Board
(13 years)
President
Global Procurement
(33 years)
North America Pharmaceutical
Paul Julian
North America Pharmaceutical Distribution And
Services Leadership Team
Brian Tyler
President
North America
Pharmaceutical Distribution
and Services
(18 years)
Mark Walchirk
Alain Champagne
Nick Loporcaro
Emilie Ray
President
McKesson U.S. Pharmaceutical
(14 years)
President
McKesson Canada
(5 years)
President
McKesson Specialty Health
(12 years)
President
McKesson Pharmacy
Systems & Automation
(15 years)
North America
FY15 Milestones Across North America
U.S. Pharmaceutical
•  Added more than 500 Health Mart stores
•  ~40% year-over-year growth in OneStop Generics
•  Continued track record of new physician
additions to US Oncology since acquisition
•  >$150M in Six Sigma-related savings
•  Expanded multi-specialty revenues by 26% and
achieved leading position in rheumatology
•  1.6M lines processed per day
•  99.98% order accuracy
McKesson Canada
•  Solid retail banner performance with more than
200 stores added
•  20% growth in Specialty business
•  >580,000 lines processed per day
•  >20,000 lines processed per day
McKesson Pharmacy Systems
& Automation
•  Continued growth in key customer segments,
including 27% growth in hospital outpatient
setting
•  EnterpriseRx ranked as a leading outpatient
pharmacy system by KLAS1
•  99.95% system availability for hosted clients
North America
1Source:
KLAS, 2015 Rankings
Pharmaceutical Industry Landscape
Mid-Single Digit Compound Annual Growth from 2014-20191
Overall U.S. and Canadian Market
Sales (USD Billion)
% Change
500
14
12
400
10
300
8
200
6
4
100
2
2019
2018
2017
2016
2015
2014
2013
2012
2011
0
2010
0
Steady
organic
growth
Pricing
trends and
healthy
pipeline
Demographics,
chronic disease
and coverage
expansion
1Source:
This information is an estimate derived from the use of information under license from the following IMS Health information service: Market Prognosis North America
for the period 2010-2019 (IMS Health Market Prognosis reports for Canada and the U.S. published March 2015).
Note: IMS expressly reserves all rights, including rights of further copying, distribution and republication. McKesson does not warrant or represent the accuracy of IMS data or
McKesson’s interpretations of IMS data. Any subsequent use or interpretation of this data will be the liability of the receiving party and not of McKesson or IMS.
North America
A Broad Value Proposition Across North America
Payers
Pharmaceutical
Manufacturers
Regulatory Agencies/
Government
Customers
•  Retail chains and independent pharmacies
•  Health systems and alternate care sites
v
•  Community clinics
Patient
Manufacturing Partners
Retail Pharmacies
Health
Systems
•  Procurement scale
•  Supply chain efficiency and product safety
•  Product commercialization services
Alternate Care
Sites
Physicians
North America
Focused On Customer Success
Retail
Pharmaceutical distribution
services
Health Systems
Supply chain expertise
Specialty distribution
Community Clinics
Oncology and multi-specialty
distribution and services
Brand and specialty
Data analytics
US Oncology
Generic
Consulting services
GPOs
Health Mart
340B services
Canadian banners
Packaging services
Canadian infusion clinics
and services
Private label
Outpatient pharmacy systems
Payer solutions
Central fill
Manufacturer services
Supplylogix/
Inventory Management
Clinical research services
iKnowMed
Pharmacy automation
Procurement at Scale Plus Supply Chain Excellence
North America
Industry-Leading Capabilities For Manufacturers
Scale and Reach
~50K
customer locations spanning
market channels
Flagship
generic procurement programs
Multiple channels
and market access
High Efficiency
Best-in-class network;
organized for quality, efficiency
and speed
Strong footprint
of banner
pharmacies
Services
Supporting
pharmaceutical
development
life cycle
Product commercialization
Consulting and data analytics
Clinical research capabilities
Patient access and support
Risk evaluation mitigation
North America
Positioned For Growth In Specialty
Specialty Drives >50% of North American Pharmaceutical Market Growth 2013-20181
Overall U.S. and Canadian
Pharmaceutical Market
•  Multiple distribution channels
•  Leading position in community oncology
Specialty
•  Leading positions in rheumatology,
gastroenterology and ophthalmology
•  85+ infusion community clinics in
Canada
•  Access and patient programs for banner
pharmacies
•  Data and analytics
•  Clinical research capabilities
2013
2018
1IMS
Health Global Outlook for Medicines Through 2018, November 2014. Represents percentage of absolute growth in USD using constant currency exchange rates for North
America (by market) from 2013-2018
Note: IMS expressly reserves all rights, including rights of further copying, distribution and republication. McKesson does not warrant or represent the accuracy of IMS data or
McKesson’s interpretations of IMS Health data. Any subsequent use or interpretation of this data will be the liability of the receiving party and not of McKesson or IMS Health.
North America
Priorities Across North America Distribution
And Services
Achievements
Priorities
Well-positioned in growing
markets
Maximize global sourcing
opportunity
Deep customer relationships
and a differentiated approach
to value creation
Expand value provided to
existing and diverse customer
base
Proven expertise and robust
offerings across channels
Drive innovation and
operational excellence
North America
U.S. Pharmaceutical
Mark Walchirk
President
U.S. Pharmaceutical
U.S. Pharmaceutical Has A Broad
Value Proposition
Payers
Pharmaceutical
Manufacturers
Retail National Pharmacy
Government
Independent and Small Chain Pharmacy
v
Patient
Retail Pharmacies
Health
Systems
Alternate Care
Sites
•  Industry-leading service levels
•  Proprietary OneStop Generics program and NorthStar
private label
•  Technology offerings, including RelayHealth and Supplylogix
•  Clinical services and pharmacy systems
Physicians
• 
• 
• 
• 
Health Mart franchise
Proprietary OneStop Generics program
Technology offerings, including RelayHealth and Supplylogix
Managed care contracting and pharmacy solutions
Health Systems and Institutional
Pharmacy
• 
• 
• 
• 
Proprietary OneStop Generics program
Clinical / Operations solutions and consulting
Technology offerings, including Macro Helix
Packaging and inventory management
North America
U.S. Pharmaceutical Market Overview
Brand Growth
Generic Growth
2.9% CAGR
7.2% CAGR
2015 to 20191
Specialty Medicines
Expect >50%
of market growth in the North American
pharmaceutical market will be from
Specialty medicines during 2013 to 20182
2015 to 20191
Generic Launches
$85.1B
of brand sales at risk from
2015 to 20193
1IMS
Health Market Prognosis North America for the period 2015-2019, March 2015
Health Global Outlook for Medicines Through 2018, November 2014. Represents percentage of absolute growth in USD using constant currency exchange rates for
North America (by market) from 2013-2018
3IMS Health National Sales Perspectives, December 2014; sales in year prior to expiry for 2009-2014; MAT Sept 2014 sales shown for 2015-2019
Note: IMS expressly reserves all rights, including rights of further copying, distribution and republication. McKesson does not warrant or represent the accuracy of IMS data
or McKesson’s interpretations of IMS data. Any subsequent use or interpretation of this data will be the liability of the receiving party and not of McKesson or IMS.
2IMS
North America
Our Generics Programs Continue To Drive
Value For Customers
OneStop Revenue
OneStop
manufacturers
Strong
compliance
and
growth
FY15
FY14
FY13
pricing, choice
and industry-leading
service levels
FY12
100+
Competitive
FY11
Expert product sourcing
and deep relationships with
FY10
proprietary generics program
>10 years
of leadership
in NorthStar
private label
North America
McKesson: A Valuable Partner To
Retail National Pharmacies
Strong track record of
renewing and
expanding
Rite Aid
our customer relationships
Assumed
responsibility for
sourcing
and
distribution
Operationalized
daily direct store
delivery to
4,500+
stores
Broad
service
offerings
cater to individual
customer needs
North America
McKesson: A Valuable Partner To
Independent Pharmacies
Health Mart is the Largest Network of Independent Pharmacies in the U.S.
Health Mart Strategy
Access to
preferred
networks
Drive
patients
into store
Expand store
revenue
Health Mart Store Count
3,865
2,941 3,096
3,281
2014 Pharmacy Innovator
of the Year Award from
Chain Drug Review
FY12
FY13
FY14
North America
FY15
Better Health For McKesson’s Independent
Pharmacy Customers
Heath Mart Customer Spotlight
Offerings
Results
•  Fully branded Health Mart
•  Grew prescriptions per day by >15%
in a two-year period in a competitive
environment
•  Purchases generics through OneStop
Generics program
•  Participates in AccessHealth
•  Utilizes marketing, data analytics and
adherence programs
•  Integral part of the community, driving
customer loyalty and keeping the business
strong
#1 Independent network in largest national pharmacy quality program
Health Mart and AccessHealth provide preferred access to ~4 million lives
North America
McKesson: A Valuable Partner To Health
Systems And Institutional Customers
Solutions-led
approach
combining robust distribution
capabilities with unique services and
technologies
•  Data analytics
•  Supply chain expertise
•  Cost containment and revenue
enhancement services
•  Specialty consulting
•  340B services
Federal
Department of Veterans Affairs
Department of Defense
IDNs
Supply partnerships with the
nation’s leading health
systems and alliances
Alternate site
Tailored capabilities
for long-term care and
specialty pharmacies
North America
Operational Excellence
Efficiency
One third
of medicines in North
America delivered daily
FY15 Highlights
•  New NRDC fully operational
•  ~20% increase in lines processed
across the network
•  Six Sigma process improvements
generated >$150M in savings
Quality
Productivity
99.98%
Investing in
order accuracy
to increase productivity
technology
Focus Areas
•  Ongoing capital investment to maintain
state-of-the-art distribution network
•  Investments in technology and
automation to drive productivity gains
•  Best-in-class NRDC services
North America
Our operational excellence is
driven by our people,
infrastructure and investments
North America
Nick Loporcaro
President
Supporting Key Stakeholders to Drive Better Patient Outcomes
A Leading Position in the
Community Channel
Payers
Pharmaceutical
Manufacturers
Government
•  The leader in community oncology
•  Leading position in rheumatology
•  Increasing scale in other specialties
A Strong Position with Payers
v
•  National presence across specialties
Patient
•  Best-in-class tools to optimize payer contracting
Retail Pharmacies
Health
Systems
A Valuable Partner to Manufacturers
•  Spectrum of services across the drug life cycle,
from clinical research to commercialization
Alternate Care
Sites
Physicians
•  Solutions for different types of specialty products,
both innovator and biosimilar
North America
A Broad Footprint Across Multiple Specialties
Fast Facts1:
•  >3,000
oncologists
•  >4,500 other
specialists
•  >400 payer
relationships
Practice Locations:
• 
• 
• 
The US Oncology Network
Open Market Oncology
Other Specialties
Scale
Technology
Breadth
North America
1McKesson
Specialty Health statistics as of March 31, 2015
The US Oncology Network
Enabling High-Quality Clinical Care
Largest Community-Based
Oncology Network in the U.S.1
Network Services
•  Practice strategy planning
•  Innovative managed care contracting
•  >60,000 clinical trial patients
•  >50 FDA-approved drugs
representing ~1/3 of approved
cancer therapies
•  >120 early-phase studies
•  Clinical research
•  Clinical education
•  Best-in-class EHR (iKnowMed)
•  Cutting-edge clinical decision support tools
(Clear Value Plus)
•  Physician oncology portal
•  >300 peer-reviewed publications
since January 2013
North America
1US
Oncology statistics as of March 31, 2015
Specialty Health Payer Solutions
Enabling Guidelines and Pathways at the Point of Care
Value Pathways
• 
Clear Value Plus
Powered by direct collaboration with
National Comprehensive Care
Network (NCCN) physicians
•  Ability to interface with any EHR
• 
Evidence-based protocols to manage
overall cost of care
•  Real-time reporting to support quality
programs
• 
Regimens based on efficacy, toxicity
and cost
•  Engage physicians before treatment
decision is made
North America
McKesson Specialty Health Payer Solutions
Providing Solutions for High-Quality, Low-Cost Care
Innovent Oncology
Collaboration with payers
to help patients
understand and manage
side effects and consider
advanced care planning
Episodes of Care
Single, upfront payment
for each episode
Episode payment can
increase if outcomes
improve or total cost of
care decreases
Oncology Care Model
Proposed payment model
pilot that includes financial
and performance
accountability for
episodes of care
surrounding
chemotherapy
North America
Specialty Manufacturer Value Chain
Supporting Unique Needs of Specialty Drugs
Large to niche
populations
Development
Limited distribution
and dispensing
Physician
education
Specialized
handling
Detailed inventory
control
Patient
support
Outcomes
tracking
North America
Specialty Health Manufacturer Solutions
Supporting Unique Needs of Specialty Manufacturers
Value-Added Services
•  Efficient clinical trials
•  Prescriber outreach and education
•  Patient counseling and assistance
programs
Offered Solutions
US Oncology Research
Clinical Trial Management Systems
My Care Plus
•  Reimbursement support
•  Market analytics and insights
Physician Portal
•  Sales force optimization
•  Drug safety monitoring
Market-Connect
•  Pharmacy transaction data
•  Clinical outcomes assessment
•  Adherence services
iKnowMed
Universal Hub
Cold Chain Shipping
3PL
Managed Distribution
North America
Positioned For Success With Biosimilars
Supporting Biosimilar Launches Through a Comprehensive Platform
Biosimilar Considerations
Multichannel
Presence
•  Time to develop and product
commercialization
•  Ability to substitute
•  Physician views on quality and
Access
via network and
group purchasing
organizations
efficacy
•  Number of players and competing
products
•  Channel of delivery
•  Therapeutic area of pharmaceuticals
•  Regulatory approvals pathway
Strong
Partnerships
with
manufacturers
Commercial
Capabilities
•  Distribution
•  Patient care
•  Services
North America
Partnering with Key Stakeholders to Deliver Better Health
Pharmaceutical Manufacturers
Payers
Improving
Optimizing
Complete product life-cycle support
Payer contracting
Payers
Pharmaceutical
Manufacturers
Government
v
Retail
Pharmacies
Alternate Care
Sites
Patient
Health
Systems
Physicians
Enabling
High-quality clinical are
Physicians
North America
McKesson Canada
Alain Champagne
President
McKesson Canada
McKesson Canada: A Strong Value Proposition
A Unique Portfolio of Business Assets
Payers
Pharmaceutical
Manufacturers
Government
•  Well-positioned for profitable growth
•  Strategically aligned to enable strong customer
partnerships and quality patient care
Taking Advantage of Scale
v
•  Global sourcing and Sivem
Patient
Retail Pharmacies
Health
Systems
•  Banner programs strengthening Canadian
independent pharmacy
Operational Excellence
Alternate Care
Sites
Physicians
•  Operational excellence and Six Sigma discipline
•  Highly engaged workforce
North America
Driving Business Growth In A Dynamic Market
Market Overview
$24B
CAD
88%
Pharmacy Rx
purchases1
Pharmacy Rx
purchases
via retail pharmacy2
56%
67% - Gx
44%
33% - Bx
2005
2014
1IMS
67%
Shift in
prescribing1,3
Canadian pharmaceutical
market continues
to evolve
Generics trend increasingly
stable and predictable
Brogan, a unit of IMS Health, Monthly Market Monitor MAT purchase data, May 2015
Brogan, a unit of IMS Health, Pharma Focus 2017 Canadian market forecast for retail pharmacy Rx purchases, 2014
3IMS Brogan, a unit of IMS Health, Pharma Focus 2017 Gx/Bx script share, 2014
2IMS
of Canadian retail
pharmacy prescriptions
are generics3
North America
McKesson Canada Offers A Broad Market Reach
Distributor
15
Distribution
centers
Specialty Pharmacy
7
85+
Specialty
pharmacies
Independent
Pharmacy Banners
>1,900 banners
servicing nearly
40%
of Canadian
independent
pharmacies
Infusion
clinics
Connecting the Canadian healthcare environment
•  Integrated supply chain
•  IT connectivity solutions
•  Tele-triage
North America
Partnering With Independent Pharmacies To
Improve Store Revenues And Performance
Medicine Shoppe
Canada
Increased
National
Footprint
>1,900 stores
FY15
Better Business Health for Independent Pharmacies
10% increase
in SKUs from FY14 to FY15
+
12%
>1,700 stores
FY14
More
Scripts
+
More
OTC Sales
More Private
Label Sales
North America
Expanding Comprehensive Specialty And
Distribution Capabilities For Patients And Payers
89K
Infusions
Annually
Medical conditions addressed:
Hodgkin's Disease, Metastatic Colorectal Cancer, Ankylosing Spondylitis, Crohn’s Disease,
Psoriasis, Ulcerative Colitis and Rheumatoid Arthritis
Strong manufacturer programs that
enable clinical success
•  Comprehensive reimbursement assistance
•  Improved patient adherence
North America
Growing Sivem Portfolio To Meet Market Needs
Leveraging McKesson Global Sourcing Platform
Launched national
expansion
Supply quality and
certainty
Benefiting from McKesson’s
global sourcing reach
%
20 growth
in molecules available
across Canada during FY15
Collaboration
with NorthStar
North America
Unmatched National Reach Driving Performance
Driving Operational Excellence
Extensive network enables
next-day service or better to
95%
of Canadian population
Distribution Centers
Specialty Pharmacies
Infusion Clinics
Retail Pharmacy Banners
North America
Positioned for Growth
Leveraging Our Core Competencies
Drive Volume
and Margin in
Distribution
•  Leverage North America and
global sourcing
Grow
Specialty
•  Further enhance capabilities to
support specialty
commercialization and growth
•  Work with preferred networks
•  Lead drug delivery channels
•  Continue to grow Sivem
Grow Banner
Business
•  Integrate new banners
•  Strengthen independent
pharmacy with banner
programs
and manufacturer programs
•  Position McKesson as the
•  Use automation to further
optimize supply chain
•  Explore expansion of oncology
leading partner in Canada
pilots
Leverage Technology to Strengthen Business Channels
• 
Focus on connectivity across operations to enable growth
• 
Expand RelayHealth to optimize patient and provider connectivity
North America
Stanton McComb
President
Medical-Surgical Results And Market Overview
Medical-Surgical Revenue
•  Favorable demographic trends
Sales (USD Billion)
$5.6
$3.1
FY12
Market Trends
$5.9
•  Continual rise in U.S.
healthcare spending
•  Consolidation of customers
and suppliers
$3.6
•  Growth expected in lab and
home care markets
FY13
FY14
FY15
•  Healthcare increasingly
influenced by consumer interest
in convenience, pricing and
quality
Medical-Surgical
Note: 2013 revenue includes approximately 5 weeks of PSS World Medical (PSS) and 2014 includes a full year of PSS
Strong Customer Value Proposition through Service and Platform
Sales and Service
Payers
Pharmaceutical
Manufacturers
Government
•  >1,400 field sales reps
•  Serving >225,000 customers
Sourcing Expertise
v
•  Medical supplies, private label, equipment,
laboratory, vaccines and Rx
Patient
•  Over 275,000 products
Retail Pharmacies
Health
Systems
Distribution Network
•  National network
Alternate Care
Sites
Physicians
•  Flexible service model
•  Low-cost-to-serve through scale
Medical-Surgical
Leader Across Alternate Site Markets
#1 Market
Share
Market
#1 Share
Physician
Offices
Surgery
Surgery
Centers
Centers
Home Care
Home
#1
Care
6K Customers
Long Term
Long-term
Care
Care
12K Customers
200,000
6,000
Customers
Customers
12,000
Customers
18,000
Customers
Customers
Serving the Ambulatory and Post-Acute Care Continuum
Ambulatory
Surgery
Center
Multi-Specialty
Imaging
Center
Dialysis and
Infusion
Urgent
Care
Community
Health Centers
Laboratory
Orthopedic
Primary Care
Practice
Home Health
Agency
Durable Medical
Equipment
Long Term
Care
Medical-Surgical
Unrivaled Platform Is A Catalyst For Growth
Better
Greater
costs and
service
Alignment
across
platforms
competitive
position, gross
profit and
commissions
Preferred
supplier
growth
Medical-Surgical
Leveraging Private Label Offerings
Meeting Customer Needs Through a Broad Portfolio of Products
Creating better business
health for customers
Benefiting from market
leadership and scale
Continued growth of high
quality product portfolio
Harmonized
3,000+
private label products across
combined portfolio
Manufacturer
partnerships
driving customer value
Medical-Surgical
PSS Meeting Or Exceeding Expectations
On All Fronts
Year 1 and 2 Accomplishments
Year 3 Focus
•  Established leadership teams and
retained >1,400 sales reps
•  Complete transition to single technology
platform and distribution network
•  Met or exceeded all synergy goals
•  Complete harmonization of all product
offerings
•  Began realization of procurement
synergies
•  Migrated ambulatory sales team to new,
unified compensation model
•  Increase customer focus and sales force
engagement
•  Achieve and exceed synergy case
•  Completed integration of distribution
network and ordering platform for postacute care markets
Backed By the Strength and Scale of a Fortune 11 Company
Medical-Surgical
Case Study: Customer Benefits
Serving the Alternate Site Needs of Large and Diverse Ecosystems
Health System Customer Needs
Medical-Surgical Products
and Services
•  Medical supplies
Multi-Specialty
Laboratory
Primary Care
Practice
•  Pharmaceuticals
•  Medicare Part B billing services
•  GPO support programs
Ambulatory
Surgery
Center
Third-Party
Billing
Imaging
Center
•  Electronic Data Interchange integration
for ordering and invoicing
Customer Benefits
Supply savings and lowered
cost of doing business
System integration reduced
orders-to-invoice errors from
15% to <1%
McKesson provided
resources on-site to manage
3,700+ ship-to addresses
Medical-Surgical
Driving Excellence Through Customer Partnerships
Medical-Surgical
North America and Medical-Surgical
Distribution and Services Q&A
International Pharmaceutical
Paul Julian
Celesio: Extending Our Reach
Strengthening our ability to
meet the increasingly global
needs of the pharmaceutical
supply chain
Providing partners
significant potential
for higher efficiency
and economies of scale
Empowering more
than 6,500 owned
and banner
pharmacies
Diversified revenue
streams across the
world creating a strong
platform for growth
We supply 65,000 pharmacies and hospitals every day1
International
1Source:
Celesio Annual Report, Short Fiscal Year 2015
Global Procurement And Sourcing
North America and Europe Represent >55% of Global Drug Spend by 20181
Global footprint of combined
distribution & pharmacy operations
McKesson Global
Procurement & Sourcing
Overview
• 
Established London-based Global
Procurement & Sourcing office in
January 2015
• 
Enterprise-wide sourcing and
procurement responsibility overseen
by experienced McKesson and Celesio
leaders
• 
Engaged in active discussions to
establish worldwide partnerships
• 
Robust procurement analytics platform
1Source:
IMS Health Market Prognosis, September 2014, Estimates global spending for North America and Europe for 2018
Note: IMS expressly reserves all rights, including rights of further copying, distribution and republication. McKesson does not warrant or represent
the accuracy of IMS data or McKesson’s interpretations of IMS Health data. Any subsequent use or interpretation of this data will be the liability of
the receiving party and not of McKesson or IMS Health.
International
Synergy Target
Creating value
globally
for our partners,
customers
and shareholders
Centralizes
overall view
of sourcing across
McKesson in one area
$275M − $325M
in transaction synergies
by the end of FY19
Allows for
aggregation of data and
analytics
Creates
platform
for organization-wide
private
label
strategy
International
Global Private Label Offerings
Aggregation of Worldwide Private Label Spend Drives Opportunities Across the Portfolio
OTC
Medical Supplies
Generics
Increase private label
OTC penetration in new
and existing geographies
and categories
Advance opportunities in
global medical-surgical
supplies based on
U.S. scale
Manage opportunities in
U.S. and Canada and
consider longer-term
opportunities in Europe
Strategic Value and Experience
•  Sourcing at scale
•  Supply chain excellence
•  High product quality and availability
International
Translating Expertise For The European Market
Creating Value for Manufacturers
Manufacturer
services
•  Supply chain economics and safety
•  Forecasting and data visibility
•  Value-added services
•  Efficient distribution network
Supply chain
excellence
•  A culture of process improvement
•  Preferred generics formulary at retail
•  Off-site replenishment/central fill
Data and
analytics
•  Data-facilitated service offerings
•  Clinical care insights
•  Connectivity
International
Better Health For Retail And Banner Pharmacies
A Global Footprint
12,000+ owned and banner
pharmacies globally
•  More than 3,800 Health
Mart stores
•  Nearly 40% of independent
pharmacy market in
Canada with more than
1,900 banner stores
•  6,500 owned and banner
pharmacies across Europe
International
Market data as of March 31, 2015
Celesio Observations
Post Operating Control: Business Priorities and Progress
International
Celesio
Marc Owen
Chairman
Celesio Core Operations
Highlights
Extensive network across 13
countries in Europe
Leader in pharmaceutical
distribution
Strong retail presence with over
6,500 owned and banner
pharmacies
Population of nearly 350 million
in the markets we serve1
1U.S.
Census Bureau International Database (2015)
Note: Celesio’s Brazil operations are held for sale as of March 31, 2015 and are not included.
International
Celesio Country Leadership
Marc Owen
Chairman
13 years (McKesson)
Andre Blümel
Andreas Windischbauer
Cormac Tobin
Managing Director
Germany
(28 years)
Managing Director
Austria/Brazil/Portugal
(22 years)
Managing Director
UK/Ireland
(9 years)
Leonardo Ferrandino
Hubert Olivier
Managing Director
Italy/Slovenia
(11 years)
Managing Director
France/Belgium
(4 years)
International
Celesio Has A Broad Value Proposition
Payers
Pharmaceutical
Manufacturers
Government
Independent and Chain Pharmacies
• 
• 
• 
• 
v
Distribution services
Pharmacist training
Pharmacy, IT and back-office solutions
Private label
Patient
Manufacturer Services
Retail Pharmacies
Health
Systems
Alternate Care
Sites
•  Exclusive distribution and order management
•  Data analysis and business intelligence
•  Repackaging and marketing services support
Physicians
International
European Pharmaceutical Industry Landscape
Overall European Market
Sales (USD Billion)
% Change
0
-4%
2019
-2%
2018
50
2017
0%
2016
100
2015
2%
2014
150
2013
4%
2012
200
2011
6%
2010
250
Stable
growing
market
Increasing
generics
penetration
Demographics,
chronic disease
and new
medicines
International
Source: IMS Health Market Prognosis Summary Europe 2015-2019, value based figures, March 2015
Country Snapshot: United Kingdom
Public and Private Payers, Providers
Population
64
Hospital Industry2
Million1
24%
Private Hospitals
76%
National Health
Service Hospitals
Healthcare Providers
Healthcare Spend
1U.S.
>1,300
>14,000
hospitals3
pharmacies4
9.3% of GDP
Census Bureau International Database (2015) 2Management estimate 32014 Health and Social Care Information Centre 4German
Association of Pharmacists (ABDA), 2015 5OECD Health Data 2014: Health expenditure and financing: OECD Health Statistics (figure for 2012)
5
International
Celesio Snapshot: United Kingdom
Wholesale and Retail
Market Dynamics
•  National distribution presence
•  Wholesale margin: Tied to
manufacturer contracts
•  2nd largest retailer
•  Retail pharmacy margin: Dispensing
fee plus payment for additional
clinical services
•  Pharmacist has authority to make
generic substitution (unless doctor
rules out explicitly)
•  Mail order allowed
>14,000
pharmacies served
>65%
generic penetration
by volume1
International
1IMS
Health Market Prognosis Summary 2015-2019 Europe – UK, March 2015
Country Snapshot: Germany
Population
81
Hospital Industry2
Million1
30%
Private,
Not-for-Profit
40%
Public
30%
Private for-Profit
Healthcare Spend
1U.S.
>1,500
>20,000
hospitals3
pharmacies4
11.3% of GDP
Census Bureau International Database (2015) 2Eurostat, based on hospital beds by ownership type, 2011 3Statistiches Bundesamt, figures for
2013 4German Association of Pharmacists (ABDA), 2015 5OECD Health Data 2014: Health expenditure and financing: OECD Health Statistics (figure
for 2012)
5
International
Celesio Snapshot: Germany
Market Dynamics
•  National distribution presence
•  Wholesale margin: Fixed on
reimbursable drugs
•  Retail third-party pharmacy ownership
prohibited; 1 pharmacist allowed to own
1 main pharmacy and up to 3 additional
affiliates in regional area
•  Retail pharmacy margin: Fixed on
prescription drugs
•  Generic substitution mandatory
(unless ruled out by physician)
•  Mail order allowed
>6,200
pharmacies served
Generics choice
driven by payer
International
Country Snapshot: Norway
Population
5
Hospital Industry2
Million1
6%
Private
For-Profit
3%
Private,
Not-for-Profit
91%
Public
Healthcare Spend
1U.S.
>85
~800
hospitals3
pharmacies4
9.3% of GDP
Census Bureau International Database (2015) 2Eurostat, based on hospital beds by ownership type, 2011 3Pharmaceutical Health Information
System (PHIS) Norway, 2011 4German Association of Pharmacists (ABDA), 2015 5OECD Health Data 2014: Health expenditure and financing:
OECD Health Statistics (figure for 2012)
5
International
Celesio Snapshot: Norway
Market Dynamics
•  Self-distribution to pharmacies
•  Wholesale margin: Tied to
manufacturer contracts
•  One of the leading retailers
•  Retail pharmacy margin:
Fixed by government for
prescription drugs
•  Generic substitution allowed
•  Mail order allowed for OTC products
~300
pharmacies served
>40%
generic penetration
by volume1
International
1IMS
Health Market Prognosis Summary 2015-2019 Europe – Norway, March 2015
Celesio: Foundation of Success
Grow Customer
Relationships
Operational
Success
Global Sourcing
European
Pharmacy
Network
(EPN)
Our People
International
Grow Customer Relationships
Business
Intelligence
EPN
Health
Focus
Technology
Expanding
Breadth of
Services
Supply Chain
Excellence
Patient
Manufacturer
Scale
Scale
International
Operational Success
Investment in IT Platform
Country-Level
Data
Market
Data
Customers
Suppliers
Multi-year investment in ERP implementation will align
systems with McKesson and help drive global procurement
and distribution efficiencies
International
Operational Excellence Driving Business
Improvement
Operational Excellence Statistics
• 
• 
• 
• 
Inventory accuracy 99.91%
Delivery addresses served +19%
Lines per hour +2.1%
First Six Sigma pilots initiated
Six Sigma drives efficiency of the
business, which benefits patients,
pharmacies and Celesio
International
Global Sourcing
Initiative to Centralize Procurement Continues; Coordinating with London Office
International
Broad Retail Footprint Across Europe
Belgium
Ireland
Norway
France
Italy
Sweden
Germany
Netherlands
United Kingdom
International
Note: Brocacef is a joint venture where Celesio has an equity interest of 45%
European Pharmacy Network
Improves Celesio’s Owned and Co-op Pharmacies
Owned Pharmacies
Franchise Partner
Consistent European
brand
Common store
appearance
A differentiated
pharmacy concept
New technology and
product focus helps
drive store traffic
Cooperations and
Independents
Lloyds’ concept
elements customized
for pharmacies
Focusing on specialty
services and product
categories
Customer-Centric Approach Across All Offerings
International
EPN: Expanding Our Broad Retail Footprint
A strong
network
of owned, franchise and
cooperation pharmacies
Innovative
Economies
Leader
health services and
pharmacy management
of scale
in service, quality and
innovation
International
Shared Values
International
International Pharmaceutical Distribution
and Services Q&A
McKesson Technology
Solutions
Pat Blake
Group President Technology Solutions
Strong Value Proposition As The Industry Looks
Beyond EHR Adoption
Connecting the Healthcare Economy
Payers
Pharmaceutical
Manufacturers
Government
•  300 payers
•  4,000 hospitals; 630,000 providers and clinicians
•  50,000 pharmacies
Focusing Ahead to Manage Shift to Value
v
•  Payer and financial solutions
•  Connectivity, data and analytics
Patient
•  Provider revenue and risk management services
Retail Pharmacies
Health
Systems
Expanding Margin
•  Transaction and subscription-based revenue drives
the majority of segment operating profit
Alternate Care
Sites
Physicians
•  Long-term adjusted operating margin goal of “high
teens”
Technology Solutions
Technology Solutions Leadership
Pat Blake
EVP, Group President
(19 years)
Jeff Felton
Pat Leonard
Rod O’Reilly
President
Connected Care and Analytics
(15 years)
President
Business Performance Services
(20 years)
President
McKesson Health Solutions
(12 years)
Erkan Akyuz
Jim Pesce
President
Imaging and Workflow Solutions
(1 year)
President
Enterprise Information Solutions
(33 years)
Our Customers Continue To Undergo
Significant Change
Shifting Volume
Cost Containment
Consolidation
Performance
Consumerism
Payers
Providers
Pharmacies
Diversifying and evolving
to enable value-based
reimbursement
Scaling and integrating to
adapt in the shifting
payment environment
Redefining roles in care
delivery and consumer
engagement
Key Payer Needs For Enabling Value-Based
Reimbursement
Develop and manage
high-performing
provider networks
Ensure clinically
appropriate medical
utilization
Automate contract
and reimbursement
management
Manage complexity of
supporting FFS and
value-based models
Empowering Payers With Automation
And Intelligence
Financial Management
Network Management
Payment integrity solutions, bundled
payment automation and claims analytics
reduce administrative cost
Design, manage and optimize networks for
high performance across the full spectrum
of reimbursement models
•  80% of top 20 health plans
•  >225 managed care clients
•  Deployed with >30 health plans
•  Networks covering >40M lives
CASE STUDY
Network Development for Value-Based Care
Centralized and standardized contracts while driving administrative cost reductions
for a regional health plan
•  30%-50% reduction of network rollout costs
•  50% reduction on contract re-work
Aligning Payment And Delivery Of The Most
Appropriate Services
InterQual Clinical Criteria
Evidence‐based clinical intelligence for
optimizing care management decisions and
managing medical costs
•  >4,000 hospitals and facilities
•  80% of top 25 health plans
Continued Innovation
• 
InterQual Mobile
• 
Industry’s first admissions criteria with
co-morbidities
• 
Criteria for >700 molecular diagnostic
tests, including support for gene panels
CASE STUDY
Evidence-Based Decision Support
Reduced cost while maintaining quality by driving appropriate care for a
government payer
•  60% reduction in average length of stay
•  28% avoidance of inappropriate care
Key Provider Needs For Revenue Management
And Clinical Connectivity
Manage claims and
reimbursement process
Facilitate patient pay
and reduce bad debt
Comprehensive
revenue cycle services
Enable interoperability
and data aggregation
Helping Providers Navigate Reimbursement
And Maximize Performance
RelayHealth Financial
Business Performance Services
Cloud-based revenue cycle solutions
streamline health system operations and
accelerate payment velocity
Comprehensive revenue cycle and
physician services improve business
performance and clinical effectiveness
•  2,400 hospitals
•  Process >$1T in billing annually
•  Serve >80K physicians
•  Process >$24B in charges per year
CASE STUDY
Revenue Cycle Outsourcing
Multi-year improvement for a health system-employed medical group
•  Increased net collections by 6%
•  Decreased days in A/R by 69%
•  Reduced A/R greater than 120 days by 59%
Connecting Providers In Expanding Enterprises
And Across The Care Continuum
RelayHealth Clinical
Medical Imaging
Cloud-based solutions enable connectivity,
data aggregation, care coordination and
patient engagement
Diagnostic imaging, workflow and
vendor-neutral solutions support
enterprise imaging
•  Touch 1 in 5 U.S. patient records
•  2.4B clinical transactions per year
•  Deployed in >2,850 facilities
•  68M images managed yearly
CASE STUDY
Enterprise Medical Imaging
Centralized image management and enabled clinical interoperability for an
expanding, multi-state health system with 30 hospitals
“With McKesson, we achieved a vendor neutral environment that meets the enterprise
imaging needs of our growing affiliate health systems.”
Key Market Needs In The Rx Ecosystem
Optimize prescription
claims reimbursement
Access members for
clinical management
Achieve regulatory
compliance
Automate co-pay
assistance and prior
authorization
Enabling Rx Connectivity And Value-Added
Solutions With RelayHealth Pharmacy
Pharmacy Network
Nation’s largest pharmacy network
connects pharmacies, pharmaceutical
manufacturers, prescribers and payers
•  >50K pharmacy locations
•  17B transactions annually
Optimization and Clinical
Services
Value-added solutions for authorization,
claims editing, Star Rating performance
and automated co-pay assistance
•  Adherence support for >100 brands
•  Prevent >20K potential errors per week
CASE STUDY
Risk Evaluation and Mitigation Strategies (REMS)
FDA-approved REMS platform supporting safe dispensation of designated high-risk
medications at 35K+ pharmacies
•  Enables appropriate dispensation of 500K+ REMS prescriptions annually
•  Class-wide REMS platform covering brands and generics
Leading The Industry Towards A Vision Of
Person-Centered Interoperability
Members represent 70% of the acute
care EHR market and 24% of the
ambulatory care EHR market
>60 provider sites live across 15 states
A not-for-profit trade association of
health IT companies working to create
universal access to healthcare data
Expected to enable at least 5,000 sites
by the end of 2015
McKesson’s RelayHealth is the
nationwide service provider
Data valid as of April 1, 2015
Providing The Information Fabric To Enable
Better Business And Better Health
Connecting
the Healthcare
Economy
Focusing Ahead
to Manage the
Shift to Value
Expanding
Margin
Financial Update
James Beer
Executive Vice President,
Chief Financial Officer
Agenda
Drivers Of Value Creation
Segment Financial Review
Financial Flexibility And Capital Deployment
Track Record Of Financial Performance
Financial Update
McKesson Drives Sustained Value Creation
Attractive Healthcare Market
•  Public policy agenda supports greater access and improved efficiency
•  Demographics drive long-term demand in North America and Europe
Experienced and tenured management team with a steady track
record of delivering results
Well-positioned businesses
with margin expansion
opportunities
•  Market-leading positions
and scale
•  Global sourcing expertise
•  Operational excellence
Portfolio approach to
CAPITAL
DEPLOYMENT
Value-creating M&A
Financial Update
Scaled and Diversified Portfolio
with a Focus on High-Growth
Areas and Margin Expansion
Financial Update
Distribution Solutions: Organic Revenue Growth,
Bolstered By Acquisitions…
($ Billions)
AGR
C
9%
$176
$104
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Financial Update
…Driving Sustained Adjusted Operating Profit
Growth
($ Billions)
$4.2
$1.7
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Financial Update
Driving Long-Term Adjusted Operating Margin
Making
investments
to drive future growth
Leveraging
a scaled and
diversified
business portfolio
Innovating
Investing in
our people
to address
customer and
supplier needs
Managing
working capital
and operating
cash flows
Driving
continuous process and
productivity improvement
Long-term adjusted operating margin goal of 250–300 bps
Financial Update
Distribution Solutions FY16 Outlook
Distribution
Solutions
North America
Pharmaceutical
Distribution
and Services
MedicalSurgical
Distribution
and Services
International
Pharmaceutical
Distribution
and Services
Revenue expected to
increase by a midsingle-digit
percentage over
prior year
Revenue will
expand by a highsingle-digit
percentage versus
Fiscal 2015
Revenue to grow in
the mid-single-digit
percentage range
over prior year
Revenue to remain
approximately flat
on a constant
currency basis yearover-year
Financial Update
FY16 Distribution Solutions Financial Drivers
•  Differentiated global sourcing expertise and programs
•  Contribution from acquisition synergy case
•  Scaled leadership positions across a broad portfolio of
products and services
•  Growth in gross profit from both generic and branded drugs,
reflecting volume and pricing trends
•  Focus on higher margin, higher-growth areas – including
specialty distribution and services, medical-surgical distribution
and services and retail pharmacy solutions
•  Operational excellence
Financial Update
Diversified Portfolio
With Improved Margin and
Recurring Profit Streams
Financial Update
McKesson Technology Solutions
Sources of Operating Profit
>65%
Transaction and
subscription-based
More predictable transaction and
subscription-based revenue
streams have grown to drive a majority
of segment operating profits
Financial Update
Reflects Technology Solutions Adjusted Operating Profit for FY15 allocated by Operating Profit streams.
Technology Solutions Financial Drivers
Increasing demand
for technology driven by industry
and regulatory dynamics,
particularly around
connectivity solutions
Expense management and
portfolio optimization
to focus on higher growth
areas and drive long-term
margin expansion
Scaled leadership
positions for the future
Our Relay connectivity,
payer, imaging and
revenue cycle
management solutions are
positioned to drive steady longterm growth
Hospital software platform and certain portfolio restructuring activities
will contribute to revenue declines in FY16
Long-term adjusted operating margin goal of “high teens”
Financial Update
Expanding Adjusted Operating Margin
Driven by Portfolio Optimization and Expense Management
Adjusted Operating
Margin Growth
15.8%
12.6%
Margin Drivers
•  Optimizing portfolio
•  Investing in higher growth
areas
•  Managing operating
expenses
FY13
FY15
Financial Update
Financial Flexibility And
Capital Deployment
Strong Cash Flow and a Portfolio
Approach to Capital Allocation
Lead to Value Creation
Financial Update
Our Operating Cash Flows Have
Steadily Increased
7-Year Moving Average
OCF ($ Billions)
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Financial Update
We Remain Committed To Our Historical
Portfolio Approach To Capital Deployment…
FY09–FY15 ($ Billions)
Internal Capital
Spending
Dividends
$2.9
$6.5
Share
Repurchases
$1.2
$13.2
Nearly $24 Billion of Capital
Deployed from FY09–FY15
Acquisitions
Financial Update
…And Maintaining Investment Grade Ratings
As We Delever in FY16
Retail Pharmacy
Investing in
the Business
Technology
Infrastructure
Supply Chain
Optimization
Historical Approach
to Capital Deployment
Unchanged
Addressing $1.5B in
Debt Maturities
During FY16
Considering Value
Creating M&A
Financial Update
Capital Deployment Priorities
•  Planning ahead for upcoming debt
maturities
•  Continuing our portfolio approach to
capital deployment
–  Internal capital investments
–  Flexibility to pursue M&A opportunities
–  Dividend payments
–  WASO assumption of 236M
•  Put option available to Celesio’s
non-controlling shareholders
Financial Update
How Does It All Add Up?
Steady Track Record
of Strong Results
Financial Update
We Have A Track Record Of Steady
Revenue Growth…
($ Billions)
AGR
C
9%
$179
$106
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Financial Update
…That We Have Leveraged Into Higher
Adjusted EPS Growth
FY16 Guidance:
$12.20–$12.70
GR
A
C
17%
$11.11
$8.60
$4.27
$4.70
$5.19
FY09
FY10
FY11
$6.35
$6.45
FY12
FY13
FY14
FY15
Financial Update
FY16
Drivers Of FY16 Earnings Outlook
•  Furthering our global scale and sourcing capabilities with Celesio
•  Continuing to grow our generics business
•  Benefiting from generic and branded drug economics, including generic
drug launches
•  Executing on Celesio and PSS synergies
•  Growing our U.S. and Canadian Specialty distribution and services
businesses
•  Furthering organic growth in our Medical-Surgical business at higher
margins
•  Delivering growth from our Relay connectivity, payer-facing, revenue
cycle management and imaging solutions
•  Providing value-added products and services across both segments
Financial Update
Driving Adjusted EPS Performance
FY16 Adjusted EPS Guidance of $12.20–$12.70
Opportunities
Considerations
Favorable industry demographics
Currency exposure
Synergy case execution – Celesio
and PSS
Nature of generic launches
Procurement scale
Expanding book of business with
existing customers
Growth in Specialty and strong
market position
Regulatory environment
Pharmaceutical reimbursement
environment in Canada and Europe
Weaker economic growth in France
Competitive market for hospital software
Branded and generic pricing trends
Innovative products and services
Financial Update
In Business For Better Health
Pharmaceutical
Distribution
Specialty
Medical-Surgical
Supplies
Technology
Retail
Global Reach
Financial Update
Wrap-Up Q&A
And Summary
We Expect Fiscal 2016 Adjusted Earnings
Per Diluted Share Of $12.20 - $12.70
The Fiscal 2016 outlook is based on the following key assumptions and is also subject to the Risk Factors outlined below:
•  Distribution Solutions revenue growth is expected to increase by mid-single digits driven by market growth.
•  We expect North America pharmaceutical distribution and services will deliver high-single digit revenue growth in Fiscal 2016 compared
to Fiscal 2015.
•  International pharmaceutical and distribution services revenues are expected to be flat year-over-year on a constant currency basis.
•  Medical-Surgical distribution and services is expected to deliver mid-single digit revenue growth in Fiscal 2016 compared to Fiscal
2015.
•  Fiscal 2016 branded drug price trends in the U.S. market are expected to be similar to those we experienced in Fiscal 2015.
•  Price trends on generic drugs outside an exclusivity period, in the U.S. market, are expected to be slightly below those we experienced
in Fiscal 2015.
•  We expect the profit contribution from the launch of new oral generic pharmaceuticals in the U.S. market will decrease year-over-year.
•  Technology Solutions revenue is expected to decline mid-single digits year-over-year driven by an anticipated revenue decline in our
hospital software business and the pending sale of a business line during Fiscal 2016.
•  The guidance range assumes a full-year adjusted tax rate of approximately 31.5%, which may vary from quarter to quarter.
•  Property acquisitions and capitalized software expenditures should be between $600 million and $650 million.
•  We assume that our ownership position in Celesio will be approximately 76% for Fiscal 2016.
•  The guidance range assumes an exchange rate of $1.10 per Euro.
•  Weighted average diluted shares used in the calculation of earnings per share are expected to be approximately 236 million for the
year.
•  Cash flow from operations is expected to be approximately $3 billion.
•  Based on acquisitions announced as of March 31, 2015:
•  We expect amortization of acquisition-related intangible assets of approximately $1.23 per diluted share.
•  We expect acquisition expenses and related adjustments of 29 cents per diluted share.
•  We expect LIFO inventory-related charges of 86 cents per diluted share.
•  The Fiscal 2016 guidance range does not include any potential claim or litigation reserve adjustments, or the impact of any potential
new acquisitions and divestitures, and impairments or material restructurings.
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2015 - 2009
(unaudited)
(in millions, except per share amounts)
As Reported
(GAAP)
Revenues
$
Gross profit
Operating expenses
Other income, net
Impairment of equity investment
Interest expense
Income from continuing operations before income taxes
Income tax expense
$
Income from continuing operations after tax
Net income attributable to noncontrolling interest
Income from continuing operations, net of tax, attributable to
Diluted earnings per common share from continuing operations, net of tax,
attributable to McKesson Corporation (a)
179,045
11,411
(8,443)
63
(374)
2,657
(815)
Year Ended March 31, 2015
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
$
-
$
-
$
$
1
223
224
(78)
$
150
150
-
$
$
1,842
(67)
9
483
2
494
(157)
337
-
146
-
LIFO-Related
Adjustments
150
-
337
337
(131)
Adjusted
Earnings
(Non-GAAP)
$
$
206
-
179,045
11,758
(7,587)
65
(374)
3,862
(1,181)
2,681
(67)
$
1,775
$
337
$
146
$
150
$
206
$
2,614
$
7.54
235
$
1.43
235
$
0.63
235
$
0.64
235
$
0.87
235
$
11.11
235
Diluted weighted average common shares
As Reported
(GAAP)
Revenues
$
Gross profit
Operating expenses
Other income, net
Interest expense
Income tax expense
$
Amortization
of AcquisitionRelated
Intangibles
Amortization
Intangibles
137,392
# $
8,352
# $
(5,913)
32
(300)
2,171
(757)
1,414
5
11
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
$
308
319
(115)
204
(7)
3
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
-
$
-
$
# $
-
$
311
$
155
14
46
218
(69)
149
(2)
68
68
(15)
53
-
311
(121)
190
-
137,392
8,677
(5,382)
46
(254)
3,087
(1,077)
2,010
(4)
$
1,419
$
197
$
147
$
53
$
190
$
2,006
$
6.08
233
$
0.85
233
$
0.63
233
$
0.23
233
$
0.81
233
$
8.60
233
(a) Certain computations may reflect rounding adjustments
(unaudited)
As Reported
(GAAP)
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
-
$
-
$
-
$
-
$
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
Revenues
$
Gross profit
Operating expenses
Other income, net
Interest expense
Income tax expense
$
6,881
(4,534)
34
(191)
(240)
1,950
(587)
1,363
-
$
13
196
209
(76)
133
-
$
(10)
11
1
(6)
(5)
-
$
72
72
(27)
45
-
$
13
13
(5)
8
-
$
6,907
(4,276)
34
(191)
(229)
2,245
(701)
1,544
-
$
1,363
$
133
$
(5)
$
45
$
8
$
1,544
$
5.69
239
$
0.56
239
$
(0.02)
239
$
0.19
239
$
0.03
239
$
6.45
239
122,196
Amortization
Intangibles
As Reported
(GAAP)
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
-
$
-
$
-
$
-
$
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
Revenues
$
Gross profit
Operating expenses
Other income, net
Interest expense
Income tax expense
$
6,435
(4,289)
20
(251)
1,915
(521)
1,394
-
$
17
167
184
(71)
113
-
$
26
26
(10)
16
-
$
149
149
(89)
60
-
$
11
11
(4)
7
-
$
6,463
(3,947)
20
(251)
2,285
(695)
1,590
-
$
1,394
$
113
$
16
$
60
$
7
$
1,590
$
5.56
251
$
0.45
251
$
0.07
251
$
0.24
251
$
0.03
251
$
6.35
251
122,453
Amortization
Intangibles
122,196
122,453
(unaudited)
Amortization
Intangibles
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
-
$
-
$
-
$
5,828
(4,041)
35
(222)
1,600
(503)
1,097
-
$
16
115
131
(51)
80
-
$
43
(16)
25
52
(16)
36
-
$
213
213
(64)
149
-
$
$
1,097
$
80
$
36
$
149
$
$
4.17
263
$
0.30
263
$
0.14
263
$
0.57
263
$
As Reported
(GAAP)
Revenues
$
Gross profit
Operating expenses
Other income, net
Interest expense
Income tax expense
$
111,804
-
$
-
$
-
$
5,527
(3,558)
43
(187)
1,825
(605)
1,220
-
$
21
97
118
(46)
72
-
$
-
$
(20)
(20)
8
(12)
-
$
$
1,220
$
72
$
-
$
(12)
$
$
4.46
273
$
0.26
273
$
-
$
(0.04)
273
$
Gross profit
Operating expenses
Other income, net
Interest expense
Income tax expense
$
108,425
3
111,804
$
5,847
(3,670)
19
(197)
1,999
(635)
1,364
-
2
$
1,364
0.01
263
$
5.19
263
-
$
$
$
3
(1)
2
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
Revenues
-
Adjusted
Earnings
(Non-GAAP)
-
Amortization
Intangibles
As Reported
(GAAP)
LIFO-Related
Adjustments
LIFO-Related
Adjustments
-
Adjusted
Earnings
(Non-GAAP)
$
8
108,425
$
5,556
(3,481)
43
(187)
1,931
(646)
1,285
-
5
$
1,285
0.02
273
$
4.70
273
8
(3)
5
-
(unaudited)
As Reported
(GAAP)
Revenues
$
Gross profit
Operating expenses
Other income, net
Interest expense
Income tax expense
$
106,376
5,251
(4,080)
74
(63)
(144)
1,038
(240)
798
-
Amortization
Intangibles
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
-
$
-
$
$
29
97
126
(49)
77
-
$
-
$
-
LIFO-Related
Adjustments
$
493
493
(182)
311
-
$
-
Adjusted
Earnings
(Non-GAAP)
$
8
106,376
$
5,288
(3,490)
74
(63)
(144)
1,665
(474)
1,191
-
8
(3)
5
-
$
798
$
77
$
-
$
311
$
5
$
1,191
$
2.86
279
$
0.28
279
$
-
$
1.11
279
$
0.02
279
$
4.27
279
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
(unaudited)
(in millions)
As Reported (GAAP):
Revenues
Gross profit
Operating expenses
Other income, net
Income from continuing operations before
interest expense and income taxes
Interest expense
income taxes
Distribution
Solutions
Technology
Solutions
Corporate &
Interest
Expense
$
$
3,069
$
$
1,474
(1,039)
3
-
$
$
9,937
(6,938)
48
3,047
-
$
Gross profit margin
Operating expenses as a % of revenues
Operating pre-tax profit as a % of
Pre-Tax Adjustments:
Gross profit
Operating expenses
Other income, net
Amortization of acquisition-related
intangibles
175,976
438
-
3,047
$
5.65%
3.94%
1.73%
$
Gross profit
Operating expenses
Other income, net
Interest expense
Acquisition expenses and related
adjustments
$
-
$
(466)
12
-
$
(454)
(374)
438
$
48.03%
33.85%
14.27%
1
442
2
445
$
Distribution
Solutions
Technology
Solutions
Corporate &
Interest
Expense
179,045
$
$
3,330
$
$
1,607
(1,161)
2
-
$
11,411
(8,443)
63
-
$
3,031
(374)
(828)
$
-
8
40
48
Total
2,657
$
1
9
483
2
494
1
-
6,745
(4,301)
28
2,472
-
$
6.37%
4.72%
1.69%
-
134,062
448
-
2,472
$
5.03%
3.21%
1.84%
$
$
-
$
(451)
2
-
$
(449)
(300)
448
$
48.26%
34.86%
13.45%
1
255
256
$
Distribution
Solutions
Technology
Solutions
Corporate &
Interest
Expense
137,392
$
$
3,150
$
$
1,446
(1,120)
4
-
$
8,352
(5,913)
32
-
$
2,471
(300)
(749)
$
-
10
52
62
Total
2,171
$
1
11
308
319
1
-
5,435
(3,068)
19
(191)
2,195
-
$
6.08%
4.30%
1.80%
-
119,046
330
-
2,195
$
4.57%
2.58%
1.84%
$
$
$
(346)
11
-
$
(335)
(240)
330
$
45.90%
35.56%
10.48%
2
146
148
-
(575)
$
$
Technology
Solutions
Corporate &
Interest
Expense
122,196
$
$
3,029
$
$
1,378
(1,022)
4
-
$
6,881
(4,534)
34
(191)
$
1,950
-
$
119,424
5,057
(2,854)
16
2,219
-
$
5.63%
3.71%
1.79%
360
-
2,219
$
4.23%
2.39%
1.86%
1
13
196
209
(64)
11
(10)
11
24
-
(53)
1
24
1
-
$
1
120
121
$
360
$
16
47
63
-
17
167
184
-
-
3
155
14
46
47
-
212
-
12
224
120
18
80
218
47
Operating expenses - Litigation
reserve adjustments
150
-
-
150
68
-
-
68
72
-
-
72
149
-
-
Gross profit - LIFO-related adjustments
337
-
-
337
311
-
-
311
13
-
-
13
11
-
-
48
$
Adjusted Earnings (Non-GAAP):
Revenues
$
175,976
$
3,069
$
$
1,482
(999)
3
-
$
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
Gross profit margin
$
10,276
(6,135)
50
4,191
-
$
4,191
5.84%
3.49%
2.38%
486
-
#
$
486
13
# $
1,205
$
755
$
80
$
$
179,045
# $
134,062
$
3,330
$
$
1,620
(1,094)
2
-
$
(453)
12
-
$
(441)
(374) #
#
$
48.29%
32.55%
15.84%
(815)
-
11,758
(7,587)
65
-
$
4,236
(374)
$
3,862
6.57%
4.24%
2.37%
7,057
(3,858)
28
3,227
-
$
3,227
5.26%
2.88%
2.41%
528
-
#
$
528
48.65%
32.85%
15.86%
81
# $
916
$
280
$
67
$
(52) # $
$
137,392
$
119,046
$
3,150
$
-
$
1,457
(1,064)
4
-
$
(430)
16
-
$
(414)
(254) #
#
$
(668)
-
8,677
(5,382)
46
-
$
3,341
(254)
$
3,087
6.32%
3.92%
2.43%
5,450
(2,803)
19
(191)
2,475
-
$
2,475
4.58%
2.35%
2.08%
397
-
#
$
397
46.25%
33.78%
12.60%
(409)
11
-
$
$
(398)
(229) #
#
$
(627)
-
-
1
1
305
$
64
$
122,196
$
119,424
$
3,029
$
$
1,394
(974)
4
-
$
$
2,245
5.65%
3.50%
2.02%
5,069
(2,561)
16
2,524
-
$
2,524
4.24%
2.14%
2.11%
424
-
#
$
26
-
1
$
2,474
(229)
$
1
295
6,907
(4,276)
34
(191)
1,915
5.26%
3.50%
1.77%
20
14
46
$
$
-
3
15
-
1,144
6,435
(4,289)
20
2,166
(251)
(664)
120
-
$
122,453
45.49%
33.74%
11.89%
1
223
-
7
$
(413)
(251)
12
-
-
$
(413)
-
-
7
Total
-
1
211
-
Total pre-tax adjustments
-
Distribution
Solutions
2,190
(240)
-
11
49
60
Total
424
46.02%
32.16%
14.00%
26
149
11
1
# $
370
$
122,453
(412)
-
$
(412)
(251) #
#
$
(663)
-
6,463
(3,947)
20
2,536
(251)
$
2,285
5.28%
3.22%
2.07%
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
(unaudited)
(in millions)
As Reported (GAAP):
Revenues
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
Distribution
Solutions
Technology
Solutions
Corporate &
Interest
Expense
$
$
2,915
$
$
1,263
(1,000)
3
-
$
108,889
$
4,565
(2,673)
5
1,897
(1)
$
1,896
Gross profit margin
Pre-Tax Adjustments:
Gross profit
Operating expenses
Other income, net
Amortization of acquisition-related
intangibles
266
$
4.19%
2.45%
1.74%
$
Operating expenses - Litigation
reserve adjustments
Gross profit - LIFO-related adjustments
266
$
$
2,847
$
$
1,308
(967)
5
-
$
(562)
$
1,600
16
115
131
41
-
-
2
(16)
25
43
(16)
25
41
-
11
213
-
-
-
-
61
$
Adjusted Earnings (Non-GAAP):
Revenues
$
108,889
$
2,915
$
$
1,279
(955)
3
-
$
4,568
(2,349)
5
2,224
(1) #
2,223
4.20%
2.16%
2.04%
327
$
327
43.88%
32.76%
11.22%
11
$
1,988
(2)
$
1,986
346
(2)
$
4.00%
2.14%
1.88%
344
(331)
9
-
$
$
(322)
(183)
$
(505)
Technology
Solutions
Corporate &
Interest
Expense
108,425
$
$
2,808
$
$
1,296
(994)
6
-
$
5,527
(3,558)
43
-
$
1,825
-
5.10%
3.28%
1.86%
20
47
67
-
21
97
118
-
-
-
-
52
-
-
-
213
-
-
(20)
$
1
50
51
$
8
-
-
$
67
$
(20) # $
$
111,804
$
105,578
$
2,847
$
-
$
1,328
(920)
5
-
$
5,847
(3,670)
19
-
$
2,196
(197)
1,999
5.23%
3.28%
1.96%
4,228
(2,210)
29
2,047
(2) #
$
2,045
4.00%
2.09%
1.94%
413
(2) #
$
411
46.65%
32.31%
14.51%
(351)
9
-
$
$
(342)
(183) #
$
(525)
-
$
$
3,955
(2,777)
43
(63)
308
(4)
1,160
$
3.82%
2.68%
1.12%
304
Total
-
$
(309)
25
-
$
(284)
(142)
$
106,376
5,251
(4,080)
74
(63)
1,182
(144)
(426)
$
1,038
46.15%
35.40%
10.97%
-
4.94%
3.84%
1.11%
28
47
75
-
29
97
126
-
-
-
-
-
-
-
-
-
(20)
493
-
-
493
$
1
50
51
$
8
-
-
8
106
$
552
$
75
$
-
# $
627
108,425
$
103,568
$
2,808
$
-
$
106,376
$
1,324
(947)
6
-
$
5,556
(3,481)
43
-
$
2,118
(187)
$
103,568
1,158
2
8
59
$
Distribution
Solutions
2,012
(187)
$
$
Total
45.94%
33.97%
12.15%
3
(366)
11
-
-
4,219
(2,260)
29
-
399
-
(551)
105,578
# $
(355)
(196) #
#
$
1,822
(222)
-
$
$
5,828
(4,041)
35
-
16
45
61
$
3
$
111,804
5.21%
3.61%
1.63%
327
Gross profit margin
Technology
Solutions
-
$
$
$
(341)
(221)
Total pre-tax adjustments
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
$
(368)
27
-
Distribution
Solutions
43.33%
34.31%
9.13%
70
70
Gross profit
Operating expenses
Other income, net
Interest expense
Acquisition expenses and related
adjustments
-
Total
Corporate &
Interest
Expense
1,931
5.12%
3.21%
1.95%
3,964
(2,234)
43
(63)
1,710
2
$
1,712
3.83%
2.16%
1.65%
383
(4) #
#
$
379
47.15%
33.73%
13.64%
(309)
25
-
$
(284)
(142) #
$
(426)
-
5,288
(3,490)
74
(63)
1,809
(144)
$
1,665
4.97%
3.28%
1.70%

McKesson Corporation 2015 Investor Day

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