SAN FRANCISCO--(BUSINESS WIRE)--McKesson Corporation (NYSE:MCK) today announced a multi-year strategic
growth initiative, focused on creating innovative new solutions that
improve patient care delivery and drive incremental profit growth. The
initiative comprises multiple growth pillars, and includes a
comprehensive review of the company’s operations and cost structure,
designed to increase efficiency, accelerate execution and improve
long-term performance.
McKesson’s growth priorities include expanded supply chain and
commercialization services for pharmaceutical and medical supply
manufacturers; enhanced solutions for the rapidly-growing specialty
pharmaceutical market, and; new offerings that will strengthen and
expand the role of retail pharmacy in patient care delivery. McKesson
expects investments in these areas will accelerate the company’s growth
trajectory over the long term.
Investment to support these growth initiatives will be partially funded
by savings from the optimization of McKesson’s operating model and cost
structure. This work will take place in multiple phases and will
encompass key functional areas such as information technology, finance
and human resources.
“McKesson has constantly innovated in response to changing customer and
patient needs,” said John H. Hammergren, chairman and chief executive
officer. “This initiative continues that tradition, building on our
prior successes while focusing on new areas where we can have the
greatest impact on patient care while driving profit growth. By
embracing better ways of working and becoming more efficient and agile,
we can support innovation while creating more value for customers,
patients and shareholders.”
As a preliminary phase of implementing the strategic growth initiative,
McKesson will incur restructuring and other charges in Fiscal 2019,
which will impact the company’s results on the basis of U.S. generally
accepted accounting principles (“GAAP”). This restructuring plan
consists of after-tax GAAP charges that are estimated to be
approximately $150 million to $210 million.
McKesson is also announcing today that it has signed a definitive
agreement to acquire Medical Specialties Distributors (MSD), a leading
national distributor of infusion and medical-surgical supplies as well
as biomedical services to alternate site and home health providers.
This transaction supports two of the company’s strategic growth
pillars–manufacturer services and specialty–and complements the
company’s existing low-cost site of care infusion platform. MSD’s
established offering to providers in the home infusion market, as well
as technology and services to support customers and patients using these
products, will allow McKesson to provide incremental services to other
customer segments.
The transaction is valued at $800 million, and is expected to close in
the first half of Fiscal 2019, subject to customary closing conditions,
including necessary regulatory clearances. McKesson expects the
transaction will be modestly accretive to Adjusted Earnings per diluted
share in Fiscal 2019.
Fiscal 2018 Outlook
The company has reaffirmed its Adjusted Earnings outlook of $12.50 to
$12.80 per diluted share for the fiscal year ended March 31, 2018. The
Adjusted Earnings outlook is anticipated to benefit primarily from a
lower adjusted tax rate and better operational performance than
expected, offset by a pre-tax contribution of $100 million, or $0.31 per
diluted share, related to the creation of a non-profit foundation
dedicated to addressing issues stemming from the nation’s opioid
epidemic as previously announced on March 29, 2018.
The company expects the newly-created foundation to focus on opioid
education for patients, caregivers, and providers, addressing key policy
issues, and increasing access to life-saving treatments, such as opioid
overdose reversal medications. Please visit www.mckesson.com
to learn more about the company’s initiatives to combat the opioid
epidemic.
Further, in the fourth quarter, the company preliminarily estimates
recording GAAP after-tax net charges of approximately $0.6 billion to
$1.9 billion. These estimated charges, which will be reflected in the
company’s GAAP results, are driven primarily by goodwill and long-lived
asset impairments related to McKesson’s European and Rexall businesses
and the early repayment of long-term debt, net of estimated benefits
related to adjustments to the Federal tax reform provisional amounts
initially recorded last quarter.
Preliminary Fiscal 2019 Outlook
McKesson is in the budget development process for Fiscal 2019 and is
announcing a preliminary target for Adjusted Earnings of $13.00 to
$13.80 per diluted share.
McKesson will provide detailed financial guidance for Fiscal 2019 when
fourth quarter and Fiscal 2018 earnings results are reported on
Thursday, May 24, 2018.
Conference Call Details
The company has scheduled a thirty-minute conference call for tomorrow,
Thursday, April 26, at 8:30 AM ET. The dial-in number for individuals
wishing to participate on the call is 323-794-2551. Craig Mercer, senior
vice president, Investor Relations, is the leader of the call, and the
password to join the call is ‘McKesson’. A telephonic replay of this
conference call will be available for five calendar days. The dial-in
number for individuals wishing to listen to the replay is 719-457-0820
and the pass code is 7951872. An archive of the conference call will
also be available on the company’s Investor Relations website at http://investor.mckesson.com.
Dividend Declaration
The company’s Board of Directors today declared a regular dividend of
$0.34 cents per share of common stock. The dividend will be payable on
July 2, 2018, to stockholders of record on June 1, 2018.
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, acquisition-related expenses and
adjustments, LIFO inventory-related adjustments, gains from antitrust
legal settlements, restructuring charges, and other adjustments.
Risk Factors
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, as amended, that involve risks and
uncertainties that could cause actual results to differ materially from
those projected, anticipated or implied. These statements may be
identified by their 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. It is not possible to predict or identify all such risks and
uncertainties; however, the most significant of these risks and
uncertainties are described in the company’s Form 10-K, Form 10-Q and
Form 8-K reports filed with the Securities and Exchange Commission and
include, but are not limited to: changes in the U.S. healthcare industry
and regulatory environment; managing foreign expansion, including the
related operating, economic, political and regulatory risks; changes in
the Canadian healthcare industry and regulatory environment; exposure to
European economic conditions, including recent austerity measures taken
by certain European governments; changes in the European regulatory
environment with respect to privacy and data protection regulations;
fluctuations in foreign currency exchange rates; the company’s ability
to successfully identify, consummate, finance and integrate
acquisitions; the company’s ability to manage and complete divestitures;
material adverse resolution of pending legal proceedings; competition
and industry consolidation; substantial defaults in payment or a
material reduction in purchases by, or the loss of, a large customer or
group purchasing organization; the loss of government contracts as a
result of compliance or funding challenges; public health issues in the
U.S. or abroad; cyberattack, natural disaster, or malfunction of
sophisticated internal computer systems to perform as designed; the
adequacy of insurance to cover property loss or liability claims; the
company’s failure to attract and retain customers for its software
products and solutions due to integration and implementation challenges,
or due to an inability to keep pace with technological advances; the
company’s proprietary products and services may not be adequately
protected, and its products and solutions may be found to infringe on
the rights of others; system errors or failure of our technology
products or services to conform to specifications; disaster or other
event causing interruption of customer access to data residing in our
service centers; the delay or extension of our sales or implementation
cycles for external software products; changes in circumstances that
could impair our goodwill or intangible assets; new or revised tax
legislation or challenges to our tax positions; general economic
conditions, including changes in the financial markets that may affect
the availability and cost of credit to the company, its customers or
suppliers; changes in accounting principles generally accepted in the
United States of America; withdrawal from participation in multiemployer
pension plans or if such plans are reported to have underfunded
liabilities; inability to realize the expected benefits from the
company’s restructuring and business process initiatives; difficulties
with outsourcing and similar third party relationships; risks associated
with the company’s retail expansion; and the company’s inability to keep
existing retail store locations or open new retail locations in
desirable places. 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 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.
Shareholders are encouraged to review the company’s filings with the
Securities and Exchange Commission.
About McKesson Corporation
McKesson Corporation, currently ranked 5th on the FORTUNE
500, is a global leader in healthcare supply chain management solutions,
retail pharmacy, community oncology and specialty care, and healthcare
information technology. McKesson partners with pharmaceutical
manufacturers, providers, pharmacies, governments and other
organizations in healthcare 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 that make our customers and partners more successful — all
for the better health of patients. McKesson has been named the “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.