This summary is based on the first quarter fiscal 2009 earnings call conducted by McKesson Corporation (MCK) on July 23, 2008.
Management:
Chairman, President and CEO: John H. Hammergren
EVP and CFO: Jeffrey C. Campbell
VP, IR: Ana Schrank
Key Investor Issues:
- Quarterly revenues increased 9% from $24.5 billion to $26.7 billion.
- Q1 EPS rose 8% to 83 cents versus the year ago quarter.
- The company repurchased $130 million of common stock during the quarter.
First-Quarter Financial Highlights:
The quarterly operating income grew 4% from $356 million to $371 million.
- Other income was $21 million, 43% below the year ago level due to lower interest rates on a lower cash balance.
- The interest expense of $34 million was relatively unchanged from the prior year.
The net income in the quarter was $235 million, unchanged from the previous year quarter.
- The EPS was 83 cents versus 77 cents in the last year quarter.
- The EPS leverage was driven by the impact of the aggressive $1.7 billion of share repurchases in 2008 which lowered the diluted shares outstanding by 7% year-over-year to 282 million shares.
The quarterly capital deployment was heavily weighted towards acquisitions.
- The company spent $242 million in acquisitions, much of which related to McQueary Brothers.
McKesson’s Health Mart franchise was recently ranked No. 1 in overall pharmacy customer satisfaction in the 2008 WilsonRx Pharmacy Satisfaction Survey.
- The survey was independently conducted and funded by Wilson Health Information, and Health Mart’s ranking was based on survey responses from 34,454 pharmacy customers across the U.S.
- Health Mart’s impressive growth and industry recognition underscore its strong appeal to independents looking to take advantage of solutions that help them attract new customers, maximize the value of existing customers, and enhance business efficiency.
McKesson Canada announced the acquisition of Groupe PharmEssor Inc.
- The acquired is a marketing and purchasing arm for a network of approximately 270 independently-owned pharmacies located throughout Quebec, Ontario and the Atlantic provinces of Canada.
- The pharmacies operate under the Proxim banner, which gives them the benefits of a national chain while remaining independently owned community pharmacies, similar to McKesson’s Health Mart model in the U.S.
- The management advised that the acquisition closed in early July.
McKesson Technology Solutions continued its leadership position in the revenue cycle solutions category with the introduction of Horizon Enterprise Revenue Management (Horizon ERM).
- This is a solution focused on helping customers manage the complex re-imbursement collection and patient management issues in healthcare.
- The solution is built to run on Horizon Architecture and is “open” in that it can be integrated with both McKesson and non-McKesson clinical solutions.
- Horizon ERM is forecast to better enable hospital financial managers to predict cash flow and net revenue by understanding the payment history of payors and anticipated patient throughout.
The management reported that McKesson Technology Solutions continues to receive recognition for the quality of its products.
- In the physician practice market, McKesson’s Practice Partner suite of fully integrated electronic health record (EHR) and practice management applications received top rankings in the 2008 AC Group Practice Management System (PMS) and HER Vendor Functionality and Company Rating Report.
- Practice Partner’s integrated HER and PMS software solution received an overall 5-star rating, being the best possible rating across all practice sizes.
During the quarter, the company’s accounts receivable sales facility was renewed.
