- Total revenues of $57.6 billion, reflecting 9% growth.
- Loss per diluted share of $(3.99) and Adjusted Earnings per diluted share of $3.60.
- Reaffirmed fiscal 2020 Adjusted EPS guidance range of $14.00 to $14.60.
IRVING, Texas–(BUSINESS WIRE)–McKesson Corporation (NYSE:MCK) today reported results for the second quarter ended September 30, 2019.
Fiscal 2020 Second-Quarter and Year-to-Date Result Summary
|
|
|
Second Quarter |
|
Year-to-Date |
|
||||||||||||||||||
|
($ in millions, except per share amounts) |
|
FY20 |
|
FY19 |
|
Change |
|
FY20 |
|
FY19 |
|
Change |
|
||||||||||
|
Revenues |
|
$57,616 |
|
$53,075 |
|
9% |
|
$113,344 |
|
$105,682 |
|
7% |
|
||||||||||
|
Net income / (loss)1 |
|
($729) |
|
$498 |
|
(246)% |
|
($300) |
|
$359 |
|
(184)% |
|
||||||||||
|
Adjusted Earnings1,2 |
|
$661 |
|
$714 |
|
(7)% |
|
$1,286 |
|
$1,303 |
|
(1)% |
|
||||||||||
|
Earnings / (loss) per diluted share |
|
($3.99) |
|
$2.51 |
|
(259)% |
|
($1.62) |
|
$1.79 |
|
(191)% |
|
||||||||||
|
Adjusted Earnings per diluted share2 |
|
$3.60 |
|
$3.60 |
|
— |
|
$6.91 |
|
$6.50 |
|
6% |
|
||||||||||
|
1 |
Represents continuing operations attributable to McKesson |
|
|
2 |
Represents a non-GAAP financial measure; refer to the reconciliations of non-GAAP financial measures included in accompanying schedules |
“McKesson’s second-quarter results reflect continued momentum across the business as well as further progress against our cost savings initiatives,” said Brian Tyler, chief executive officer. “As we look forward to the second half of our fiscal year, we remain confident in the strength of our broad set of solutions and capabilities, delivering execution against our strategic imperatives as we become a more focused and efficient organization.”
Revenues increased 9% year-over-year, primarily driven by growth in the U.S. Pharmaceutical and Specialty Solutions segment, largely due to branded pharmaceutical price increases and higher volumes from a retail national account customer.
Loss per diluted share of $(3.99) included charges of approximately $1.4 billion, or $5.73 per diluted share, primarily related to an impairment in connection with McKesson’s planned exit of its investment in Change Healthcare. Adjusted Earnings per diluted share of $3.60 was flat year-over-year, as a lower share count and growth in the Medical-Surgical and McKesson Prescription Technology Solutions (MRxTS) businesses were offset primarily by the lapping of a prior year pre-tax benefit of $90 million, or $0.33 per diluted share, related to a reversal of a contractual liability associated with McKesson’s investment in Change Healthcare. Excluding the prior year benefit of $0.33 per diluted share from Adjusted Earnings, second-quarter results per diluted share increased 10%.
During the first half of the fiscal year, McKesson returned $1.6 billion of cash to shareholders via $1.4 billion of common stock repurchases and $148 million of dividend payments. For the first half of the fiscal year, McKesson used cash from operations of $159 million, and invested $184 million internally, resulting in negative free cash flow of $343 million.
U.S. Pharmaceutical and Specialty Solutions Segment
- Revenues were $46.0 billion, up 10%, driven primarily by branded pharmaceutical price increases and increased specialty pharmaceutical volume from the company’s largest retail national account customer, partially offset by branded to generic conversions.
- Operating profit was $639 million and operating margin was 1.39%. Adjusted operating profit was $641 million, up 1%, due to continued growth in the specialty businesses, partially offset by customer and product mix. Adjusted operating margin was 1.39%, down 14 basis points, primarily resulting from the higher volume of specialty pharmaceuticals.
European Pharmaceutical Solutions Segment
- Revenues were $6.6 billion, down 1% on a reported basis and up 4% on an FX-adjusted basis, driven primarily by growth in the pharmaceutical distribution business.
- Operating profit was $1 million and operating margin was 0.02%. Adjusted operating profit was $41 million, down 23%, and adjusted operating margin was 0.62%. On an FX-adjusted basis, adjusted operating profit was $43 million, down 19%, and adjusted operating margin was 0.62%, down 18 basis points, driven by the challenging retail pharmacy environment in the U.K.
Medical-Surgical Solutions Segment
- Revenues were $2.1 billion, up 6%, driven primarily by growth in the Primary Care business, largely due to the increase in volume of pharmaceutical products.
- Operating profit was $129 million and operating margin was 6.27%. Adjusted operating profit was $166 million, up 20%, and adjusted operating margin was 8.07%, up 99 basis points. The year-over-year growth primarily reflects growth in the Primary Care business and the lapping of bad debt expense in the prior year.
Other remaining businesses
- Revenues were $3.0 billion, up 4% on a reported basis and up 5% on an FX-adjusted basis, driven by growth in the Canadian and MRxTS businesses.
- Operating loss was $(1.3) billion driven by charges of approximately $1.4 billion, primarily related to an impairment in connection with McKesson’s planned exit of its investment in Change Healthcare. Adjusted operating profit was $221 million, down 26% on both a reported and FX-adjusted basis, primarily due to the lapping of the $90 million contractual liability reversal in the prior year and lower contribution from the company’s investment in Change Healthcare, partially offset by higher volumes in the MRxTS business.
Company Updates
- On October 21, 2019, the company announced an agreement in principle to settle all claims against the company in the first track of the multi-district opioid litigation, related to two Ohio counties. As a result, McKesson recorded a pre-tax charge of $82 million within operating expenses for the second quarter of fiscal 2020.
- McKesson recently published its FY19 Corporate Responsibility Report, describing how the company continues to work to use its economic, environmental, social and governance resources thoughtfully and responsibly. This global report puts emphasis on three topics: product quality and patient safety; eco-efficient transportation and operations; and better health for employees and communities.
- McKesson opened a new distribution center in the Seattle area, an eco-friendly facility featuring the latest in supply chain technology and state-of-the-art automation.
- Maria Martinez joined McKesson’s Board of Directors as a new independent director effective October 18, 2019.
Fiscal 2020 Outlook
- McKesson reaffirmed fiscal 2020 Adjusted Earnings per diluted share guidance range of $14.00 – $14.60.
Conference Call Details
The company has scheduled a conference call for today, Wednesday, October 30th, at 8:00 AM ET to discuss the company’s financial results. A live audio webcast of the conference call will be available on McKesson’s Investor Relations website at http://investor.mckesson.com. The conference call can also be accessed by dialing 786-815-8297. The password is ‘McKesson’. A telephonic replay of this conference call will be available for 14 calendar days. For individuals wishing to listen to the replay, the dial-in number is 404-537-3406 and the pass code is 6206708. An archive of the conference call will also be available on the company’s Investor Relations website at http://investor.mckesson.com.
Upcoming Investor Events
McKesson management will be participating in the following investor conference:
- 38th Annual J.P. Morgan Healthcare Conference, January 13-16, 2020, in San Francisco, CA.
Audio webcasts will be available live and archived on the company’s Investor Relations website at http://investor.mckesson.com. A complete listing of upcoming events for the investment community is available on the company’s Investor Relations website.
Adjusted Earnings
McKesson separately reports financial results on the basis of Adjusted Earnings. Adjusted Earnings is a non-GAAP financial measure defined as GAAP income from continuing operations, excluding amortization of acquisition-related intangible assets, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment and related charges, and other adjustments as well as the related income tax effects for each of these items, as applicable. A reconciliation of McKesson’s GAAP financial results to Adjusted Earnings is provided in Schedules 2 and 3 of the financial statement tables included with this release.
The company does not provide forward-looking guidance on a GAAP basis prospectively as McKesson is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure, without unreasonable effort, because McKesson cannot reliably forecast LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment and related charges, and other adjustments, which are difficult to predict and estimate. These items are inherently uncertain and depend on various factors, many of which are beyond the company’s control, and as such, any associated estimate and its impact on GAAP performance could vary materially.
FX-Adjusted
McKesson also presents its financial results on an FX-adjusted basis. The company conducts business worldwide in local currencies, including the Euro, British pound and Canadian dollar. As a result, the comparability of the financial results reported in U.S. dollars can be affected by changes in foreign currency exchange rates. FX-adjusted information is presented to provide a framework for assessing how the company’s business performed excluding the effect of foreign currency exchange rate fluctuations. The supplemental FX-adjusted information of the company’s GAAP financial results and Adjusted Earnings (Non-GAAP) is provided in Schedule 3 of the financial statement tables included with this release.
Free Cash Flow
McKesson also provides free cash flow, a non-GAAP measure. Free cash flow is defined as net cash provided by (used in) operating activities less payments for property, plant and equipment and capitalized software expenditures, as outlined in the company’s condensed consolidated statements of cash flows.
Cautionary Statements
Except for historical information contained in this press release, matters discussed may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that involve risks and uncertainties that could cause actual results to differ materially from those in those statements. It is not possible to identify all such risks and uncertainties. The reader should not place undue reliance on forward-looking statements, which speak only as of the date they are first made. Except to the extent required by law, the company undertakes no obligation to publicly update forward-looking statements. Forward-looking statements may be identified by their use of 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, assumptions or intentions may also include forward-looking statements. We encourage investors to read the important risk factors described in the company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission. These risk factors include, but are not limited to: changes in the healthcare industry and regulatory environment; fluctuations in foreign currency exchange rates; the impact of the Change Healthcare joint venture on the company’s results of operations; the company’s ability to manage and complete divestitures and distributions; material adverse resolution of pending legal proceedings, including those related to the distribution of controlled substances; cyberattack, natural disaster, or malfunction of sophisticated internal computer systems to perform as designed; and the potential inadequacy of insurance to cover property loss or liability claims.
About McKesson Corporation
McKesson Corporation, currently ranked 7th on the FORTUNE 500, is a global leader in healthcare supply chain management solutions, retail pharmacy, healthcare technology, community oncology and specialty care. McKesson partners with life sciences companies, manufacturers, providers, pharmacies, governments and other healthcare organizations to help provide the right medicines, medical products and healthcare services to the right patients at the right time, safely and cost-effectively. United by our ICARE shared principles, our employees work every day to innovate and deliver opportunities to improve patient care in every setting — one product, one partner, one patient at a time. McKesson has been named a “Most Admired Company” in the healthcare wholesaler category by FORTUNE, a “Best Place to Work” by the Human Rights Campaign Foundation, and a top military-friendly company by Military Friendly. For more information, visit www.mckesson.com.
| Schedule 1 | ||||||||||||||||||||||||
| McKESSON CORPORATION | ||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – GAAP | ||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||||||
|
Quarter Ended September 30, |
|
|
|
|
Six Months Ended September 30, |
|
|
|||||||||||||||||
|
2019 |
|
2018 |
|
Change |
|
|
2019 |
|
2018 |
|
Change |
|||||||||||||
| Revenues |
$ |
57,616 |
|
$ |
53,075 |
|
9 |
|
% |
$ |
113,344 |
|
$ |
105,682 |
|
7 |
|
% |
||||||
| Cost of sales |
(54,749 |
) |
(50,271 |
) |
9 |
|
(107,690 |
) |
(100,099 |
) |
8 |
|
||||||||||||
| Gross profit |
2,867 |
|
2,804 |
|
2 |
|
5,654 |
|
5,583 |
|
1 |
|
||||||||||||
| Operating expenses (1) (2) |
(2,196 |
) |
(2,033 |
) |
8 |
|
(4,326 |
) |
(4,063 |
) |
6 |
|
||||||||||||
| Goodwill impairment charges (3) |
– |
|
– |
|
– |
|
– |
|
(570 |
) |
(100 |
) |
||||||||||||
| Restructuring, impairment and related charges (4) |
(45 |
) |
(82 |
) |
(45 |
) |
(68 |
) |
(178 |
) |
(62 |
) |
||||||||||||
| Total operating expenses |
(2,241 |
) |
(2,115 |
) |
6 |
|
(4,394 |
) |
(4,811 |
) |
(9 |
) |
||||||||||||
| Operating income |
626 |
|
689 |
|
(9 |
) |
1,260 |
|
772 |
|
63 |
|
||||||||||||
| Other income (expense), net (5) |
(78 |
) |
20 |
|
(490 |
) |
(41 |
) |
60 |
|
(168 |
) |
||||||||||||
| Equity earnings and charges from investment in Change Healthcare Joint Venture (6) (7) (8) |
(1,454 |
) |
(56 |
) |
NM |
|
(1,450 |
) |
(112 |
) |
NM |
|
||||||||||||
| Interest expense |
(64 |
) |
(66 |
) |
(3 |
) |
(120 |
) |
(127 |
) |
(6 |
) |
||||||||||||
| Income (loss) from continuing operations before income taxes |
(970 |
) |
587 |
|
(265 |
) |
(351 |
) |
593 |
|
(159 |
) |
||||||||||||
| Income tax benefit (expense) |
294 |
|
(35 |
) |
(940 |
) |
158 |
|
(122 |
) |
(230 |
) |
||||||||||||
| Income (loss) from continuing operations after tax |
(676 |
) |
552 |
|
(222 |
) |
(193 |
) |
471 |
|
(141 |
) |
||||||||||||
| Income (loss) from discontinued operations, net of tax |
(1 |
) |
1 |
|
(200 |
) |
(7 |
) |
2 |
|
(450 |
) |
||||||||||||
| Net income (loss) |
(677 |
) |
553 |
|
(222 |
) |
(200 |
) |
473 |
|
(142 |
) |
||||||||||||
| Net income attributable to noncontrolling interests |
(53 |
) |
(54 |
) |
(2 |
) |
(107 |
) |
(112 |
) |
(4 |
) |
||||||||||||
| Net income (loss) attributable to McKesson Corporation |
$ |
(730 |
) |
$ |
499 |
|
(246 |
) |
% |
$ |
(307 |
) |
$ |
361 |
|
(185 |
) |
% |
||||||
| Earnings (loss) per common share attributable to McKesson Corporation (a) | ||||||||||||||||||||||||
| Diluted (b) | ||||||||||||||||||||||||
| Continuing operations |
$ |
(3.99 |
) |
$ |
2.51 |
|
(259 |
) |
% |
$ |
(1.62 |
) |
$ |
1.79 |
|
(191 |
) |
% |
||||||
| Discontinued operations |
– |
|
– |
|
– |
|
(0.03 |
) |
0.01 |
|
(400 |
) |
||||||||||||
| Total |
$ |
(3.99 |
) |
$ |
2.51 |
|
(259 |
) |
% |
$ |
(1.65 |
) |
$ |
1.80 |
|
(192 |
) |
% |
||||||
| Basic | ||||||||||||||||||||||||
| Continuing operations |
$ |
(3.99 |
) |
$ |
2.52 |
|
(258 |
) |
% |
$ |
(1.62 |
) |
$ |
1.80 |
|
(190 |
) |
% |
||||||
| Discontinued operations |
– |
|
– |
|
– |
|
(0.03 |
) |
0.01 |
|
(400 |
) |
||||||||||||
| Total |
$ |
(3.99 |
) |
$ |
2.52 |
|
(258 |
) |
% |
$ |
(1.65 |
) |
$ |
1.81 |
|
(191 |
) |
% |
||||||
| Dividends declared per common share |
$ |
0.41 |
|
$ |
0.39 |
|
$ |
0.80 |
|
$ |
0.73 |
|
||||||||||||
| Weighted average common shares | ||||||||||||||||||||||||
| Diluted |
183 |
|
199 |
|
(8 |
) |
% |
185 |
|
201 |
|
(8 |
) |
% |
||||||||||
| Basic |
183 |
|
198 |
|
(8 |
) |
185 |
|
200 |
|
(8 |
) |
||||||||||||
|
(a) |
|
Certain computations may reflect rounding adjustments. |
|
(b) |
|
Net loss per diluted share for the second quarter and first half of fiscal 2020 is calculated by excluding dilutive securities from the denominator due to their antidilutive effects. |
|
NM |
|
Computation not meaningful |
|
|
|
|
|
Refer to the section entitled “Financial Statement Notes” of this release. |
||
|
|
|
|
| For additional disclosures, refer to our applicable filings with the SEC, including our Quarterly Reports on Form 10-Q for fiscal 2020 and 2019 as well as our Annual Report on Form 10-K for fiscal 2019. | ||
|
Schedule 2A |
|||||||||||||||||||||||||||||||||||||||
| McKESSON CORPORATION | |||||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) | |||||||||||||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||
| Change | |||||||||||||||||||||||||||||||||||||||
| Quarter Ended September 30, 2019 | Vs. Prior Quarter | ||||||||||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Amortization of Acquisition- Related Intangibles |
Transaction- Related Expenses and Adjustments |
LIFO Inventory- Related Adjustments |
Gains from Antitrust Legal Settlements |
Restructuring, Impairment and Related Charges, Net |
Other Adjustments, Net |
Adjusted Earnings (Non-GAAP) |
As Reported (GAAP) |
Adjusted Earnings (Non-GAAP) |
||||||||||||||||||||||||||||||
| Gross profit |
$ |
2,867 |
|
$ |
– |
|
$ |
– |
|
$ |
(33 |
) |
$ |
– |
$ |
(2 |
) |
$ |
– |
|
$ |
2,832 |
|
2 |
|
% |
2 |
|
% |
||||||||||
| Operating expenses (2) (4) |
$ |
(2,241 |
) |
$ |
118 |
|
$ |
16 |
|
$ |
– |
|
$ |
– |
$ |
45 |
|
$ |
84 |
|
$ |
(1,978 |
) |
6 |
|
% |
5 |
|
% |
||||||||||
| Other income (expense), net (5) |
$ |
(78 |
) |
$ |
– |
|
$ |
3 |
|
$ |
– |
|
$ |
– |
$ |
– |
|
$ |
105 |
|
$ |
30 |
|
(490 |
) |
% |
50 |
|
% |
||||||||||
| Equity earnings and charges from investment in Change Healthcare Joint Venture (6) (7) (8) |
$ |
(1,454 |
) |
$ |
63 |
|
$ |
263 |
|
$ |
– |
|
$ |
– |
$ |
– |
|
$ |
1,167 |
|
$ |
39 |
|
NM |
|
(30 |
) |
% |
|||||||||||
| Income (loss) from continuing operations before income taxes |
$ |
(970 |
) |
$ |
181 |
|
$ |
282 |
|
$ |
(33 |
) |
$ |
– |
$ |
43 |
|
$ |
1,356 |
|
$ |
859 |
|
(265 |
) |
% |
(6 |
) |
% |
||||||||||
| Income tax benefit (expense) |
$ |
294 |
|
$ |
(42 |
) |
$ |
(72 |
) |
$ |
8 |
|
$ |
– |
$ |
(10 |
) |
$ |
(323 |
) |
$ |
(145 |
) |
(940 |
) |
% |
(3 |
) |
% |
||||||||||
| Income (loss) from continuing operations, net of tax, attributable to McKesson Corporation |
$ |
(729 |
) |
$ |
139 |
|
$ |
210 |
|
$ |
(25 |
) |
$ |
– |
$ |
33 |
|
$ |
1,033 |
|
$ |
661 |
|
(246 |
) |
% |
(7 |
) |
% |
||||||||||
|
Earnings (loss) per diluted common share from continuing operations, net of tax, attributable to McKesson Corporation (a) (b) |
$ |
(3.99 |
) |
$ |
0.76 |
|
$ |
1.14 |
|
$ |
(0.14 |
) |
$ |
– |
$ |
0.18 |
|
$ |
5.62 |
|
$ |
3.60 |
|
(c) |
(259 |
) |
% |
– |
|
% |
|||||||||
| Diluted weighted average common shares |
|
183 |
|
|
184 |
|
|
184 |
|
|
184 |
|
|
184 |
|
184 |
|
|
184 |
|
|
184 |
|
(8 |
) |
% |
(8 |
) |
% |
||||||||||
| Quarter Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Amortization of Acquisition- Related Intangibles |
Transaction- Related Expenses and Adjustments |
LIFO Inventory- Related Adjustments |
Gains from Antitrust Legal Settlements |
Restructuring, Impairment and Related Charges, Net |
Other Adjustments, Net |
Adjusted Earnings (Non-GAAP) |
||||||||||||||||||||||||||||||||
| Gross profit |
$ |
2,804 |
|
$ |
– |
|
$ |
– |
|
$ |
(22 |
) |
$ |
– |
$ |
– |
|
$ |
– |
|
$ |
2,782 |
|
||||||||||||||||
| Operating expenses (4) |
$ |
(2,115 |
) |
$ |
121 |
|
$ |
37 |
|
$ |
– |
|
$ |
– |
$ |
82 |
|
$ |
– |
|
$ |
(1,875 |
) |
||||||||||||||||
| Other income, net |
$ |
20 |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
– |
$ |
– |
|
$ |
– |
|
$ |
20 |
|
||||||||||||||||
| Equity earnings and charges from investment in Change Healthcare Joint Venture (8) |
$ |
(56 |
) |
$ |
77 |
|
$ |
34 |
|
$ |
– |
|
$ |
– |
$ |
– |
|
$ |
1 |
|
$ |
56 |
|
||||||||||||||||
| Income from continuing operations before income taxes |
$ |
587 |
|
$ |
198 |
|
$ |
71 |
|
$ |
(22 |
) |
$ |
– |
$ |
82 |
|
$ |
1 |
|
$ |
917 |
|
||||||||||||||||
| Income tax expense |
$ |
(35 |
) |
$ |
(48 |
) |
$ |
(17 |
) |
$ |
5 |
|
$ |
– |
$ |
(15 |
) |
$ |
(39 |
) |
$ |
(149 |
) |
||||||||||||||||
| Income from continuing operations, net of tax, attributable to McKesson Corporation |
$ |
498 |
|
$ |
150 |
|
$ |
54 |
|
$ |
(17 |
) |
$ |
– |
$ |
67 |
|
$ |
(38 |
) |
$ |
714 |
|
||||||||||||||||
| Earnings per diluted common share from continuing operations, net of tax attributable to McKesson Corporation (a) |
$ |
2.51 |
|
$ |
0.75 |
|
$ |
0.27 |
|
$ |
(0.08 |
) |
$ |
– |
$ |
0.34 |
|
$ |
(0.19 |
) |
$ |
3.60 |
|
||||||||||||||||
| Diluted weighted average common shares |
|
199 |
|
|
199 |
|
|
199 |
|
|
199 |
|
|
199 |
|
199 |
|
|
199 |
|
|
199 |
|
||||||||||||||||
|
(a) |
|
Certain computations may reflect rounding adjustments. |
|
(b) |
|
We calculate GAAP net loss per diluted share for the second quarter of fiscal 2020 using a weighted average of 183 million common shares, which excludes dilutive securities from the denominator due to their antidilutive effect when calculating a net loss per diluted share. We calculate Adjusted Earnings per diluted share (Non-GAAP) for the second quarter of fiscal 2020 on a fully diluted basis, using a weighted average of 184 million common shares. Because we show the GAAP to Non-GAAP per share reconciling items on a fully diluted basis, any cross-footing differences in those items are due to different weighted average share counts. |
|
(c) |
|
Adjusted Earnings per diluted share on an FX-Adjusted basis for the second quarter of fiscal 2020 was $3.60. |
|
|
|
|
|
NM |
|
Computation not meaningful |
|
|
|
|
|
Refer to the section entitled “Financial Statement Notes” of this release. |
||
|
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP) and FX-Adjusted (Non-GAAP) definitions, refer to the section entitled “Supplemental Non-GAAP Financial Information” of this release. |
||
|
Schedule 2B |
||||||||||||||||||||||||||||||||||||||||
| McKESSON CORPORATION | ||||||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP) | ||||||||||||||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||
| Change | ||||||||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 | Vs. Prior Period | |||||||||||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Amortization of Acquisition- Related Intangibles |
Transaction- Related Expenses and Adjustments |
LIFO Inventory- Related Adjustments |
Gains from Antitrust Legal Settlements |
Restructuring, Impairment and Related Charges, Net |
Other Adjustments, Net |
Adjusted Earnings (Non-GAAP) |
As Reported (GAAP) |
Adjusted Earnings (Non-GAAP) |
|||||||||||||||||||||||||||||||
| Gross profit |
$ |
5,654 |
|
$ |
– |
|
$ |
– |
|
$ |
(48 |
) |
$ |
– |
|
$ |
(5 |
) |
$ |
– |
|
$ |
5,601 |
|
1 |
|
% |
2 |
|
% |
||||||||||
| Operating expenses (2) (4) |
$ |
(4,394 |
) |
$ |
230 |
|
$ |
33 |
|
$ |
– |
|
$ |
– |
|
$ |
68 |
|
$ |
86 |
|
$ |
(3,977 |
) |
(9 |
) |
% |
3 |
|
% |
||||||||||
| Other income (expense), net (5) |
$ |
(41 |
) |
$ |
– |
|
$ |
3 |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
123 |
|
$ |
85 |
|
(168 |
) |
% |
39 |
|
% |
||||||||||
| Equity earnings and charges from investment in Change Healthcare Joint Venture (6) (7) (8) |
$ |
(1,450 |
) |
$ |
140 |
|
$ |
290 |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
1,167 |
|
$ |
147 |
|
NM |
|
23 |
|
% |
|||||||||||
| Income (loss) from continuing operations before income taxes |
$ |
(351 |
) |
$ |
370 |
|
$ |
326 |
|
$ |
(48 |
) |
$ |
– |
|
$ |
63 |
|
$ |
1,376 |
|
$ |
1,736 |
|
(159 |
) |
% |
1 |
|
% |
||||||||||
| Income tax benefit (expense) |
$ |
158 |
|
$ |
(87 |
) |
$ |
(83 |
) |
$ |
12 |
|
$ |
– |
|
$ |
(15 |
) |
$ |
(328 |
) |
$ |
(343 |
) |
(230 |
) |
% |
15 |
|
% |
||||||||||
| Income (loss) from continuing operations, net of tax, attributable to McKesson Corporation |
$ |
(300 |
) |
$ |
283 |
|
$ |
243 |
|
$ |
(36 |
) |
$ |
– |
|
$ |
48 |
|
$ |
1,048 |
|
$ |
1,286 |
|
(184 |
) |
% |
(1 |
) |
% |
||||||||||
|
Earnings (loss) per diluted common share from continuing operations, net of tax, attributable to McKesson Corporation (a) (b) |
$ |
(1.62 |
) |
$ |
1.52 |
|
$ |
1.31 |
|
$ |
(0.19 |
) |
$ |
– |
|
$ |
0.26 |
|
$ |
5.63 |
|
$ |
6.91 |
|
(c) |
(191 |
) |
% |
6 |
|
% |
|||||||||
| Diluted weighted average common shares |
|
185 |
|
|
186 |
|
|
186 |
|
|
186 |
|
|
186 |
|
|
186 |
|
|
186 |
|
|
186 |
|
(8 |
) |
% |
(7 |
) |
% |
||||||||||
| Six Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Amortization of Acquisition- Related Intangibles |
Transaction- Related Expenses and Adjustments |
LIFO Inventory- Related Adjustments |
Gains from Antitrust Legal Settlements |
Restructuring, Impairment and Related Charges, Net |
Other Adjustments, Net |
Adjusted Earnings (Non-GAAP) |
|||||||||||||||||||||||||||||||||
| Gross profit |
$ |
5,583 |
|
$ |
– |
|
$ |
1 |
|
$ |
(43 |
) |
$ |
(35 |
) |
$ |
– |
|
$ |
– |
|
$ |
5,506 |
|
||||||||||||||||
| Operating expenses (1) (3) (4) |
$ |
(4,811 |
) |
$ |
242 |
|
$ |
57 |
|
$ |
– |
|
$ |
– |
|
$ |
178 |
|
$ |
487 |
|
$ |
(3,847 |
) |
||||||||||||||||
| Other income, net |
$ |
60 |
|
$ |
1 |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
61 |
|
||||||||||||||||
| Equity earnings and charges from investment in Change Healthcare Joint Venture (8) |
$ |
(112 |
) |
$ |
154 |
|
$ |
74 |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
4 |
|
$ |
120 |
|
||||||||||||||||
| Income from continuing operations before income taxes |
$ |
593 |
|
$ |
397 |
|
$ |
132 |
|
$ |
(43 |
) |
$ |
(35 |
) |
$ |
178 |
|
$ |
491 |
|
$ |
1,713 |
|
||||||||||||||||
| Income tax expense |
$ |
(122 |
) |
$ |
(98 |
) |
$ |
(33 |
) |
$ |
11 |
|
$ |
9 |
|
$ |
(26 |
) |
$ |
(39 |
) |
$ |
(298 |
) |
||||||||||||||||
| Income from continuing operations, net of tax, attributable to McKesson Corporation |
$ |
359 |
|
$ |
299 |
|
$ |
99 |
|
$ |
(32 |
) |
$ |
(26 |
) |
$ |
152 |
|
$ |
452 |
|
$ |
1,303 |
|
||||||||||||||||
| Earnings per diluted common share from continuing operations, net of tax, attributable to McKesson Corporation (a) |
$ |
1.79 |
|
$ |
1.49 |
|
$ |
0.49 |
|
$ |
(0.16 |
) |
$ |
(0.13 |
) |
$ |
0.76 |
|
$ |
2.26 |
|
$ |
6.50 |
|
||||||||||||||||
| Diluted weighted average common shares |
|
201 |
|
|
201 |
|
|
201 |
|
|
201 |
|
|
201 |
|
|
201 |
|
|
201 |
|
|
201 |
|
||||||||||||||||
| (a) | Certain computations may reflect rounding adjustments. | |
| (b) | We calculate GAAP net loss per diluted share for fiscal 2020 using a weighted average of 185 million common shares, which excludes dilutive securities from the denominator due to their antidilutive effect when calculating a net loss per diluted share. We calculate Adjusted Earnings per diluted share (Non-GAAP) for fiscal 2020 on a fully diluted basis, using a weighted average of 186 million common shares. Because we show the GAAP to Non-GAAP per share reconciling items on a fully diluted basis, any cross-footing differences in those items are due to different weighted average share counts. | |
| (c) | Adjusted Earnings per diluted share on an FX-Adjusted basis for fiscal 2020 was $6.92, which excludes the foreign currency exchange effect of $0.01. | |
|
NM |
Computation not meaningful | |
| Refer to the section entitled “Financial Statement Notes” of this release. | ||
| For more information relating to the Adjusted Earnings (Non-GAAP) and FX-Adjusted (Non-GAAP) definitions, refer to the section entitled “Supplemental Non-GAAP Financial Information” of this release. | ||
Contacts
Holly Weiss, 972-969-9174 (Investors and Financial Media)
Holly.Weiss@McKesson.com
David Matthews, 214-952-0833 (General and Business Media)
David.Matthews@McKesson.com