Q1 2012 Earnings Call
July 28, 2011 5:00 pm ET
Jeffrey Jeff - Chief Financial Officer and Executive Vice President
John Hammergren - Chairman, Chief Executive Officer and President
Ana Schrank -
George Hill - Citigroup Inc
Lisa Gill - JP Morgan Chase & Co
Ricky Goldwasser - Morgan Stanley
Ross Muken - Deutsche Bank AG
Helene Wolk - Sanford C. Bernstein & Co., Inc.
Albert Rice - Susquehanna Financial Group, LLLP
Thomas Gallucci - Lazard Capital Markets LLC
Steven Halper - Stifel, Nicolaus & Co., Inc.
John Ransom - Raymond James & Associates, Inc.
Lawrence Marsh - Barclays Capital
Glen Santangelo - Crédit Suisse AG
Robert Jones - Goldman Sachs Group Inc.
Eric Coldwell - Robert W. Baird & Co. Incorporated
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Good afternoon, and welcome to the McKesson Corporation Quarterly Earnings Call. [Operator Instructions] Today's call is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Ms. Ana Schrank, Vice President of Investor Relations. Please go ahead, ma'am.
Thank you, Lisa. Good afternoon, and welcome to the McKesson Fiscal 2012 First Quarter Earnings Call. With me today are John Hammergren, McKesson's Chairman and CEO; and Jeff Campbell, our CFO. John will first provide the business update and will then introduce Jeff, who will review the financial results for the quarter. After Jeff's comments, we will open the call for your questions. We plan to end the call promptly after 1 hour at 6:00 Eastern time.
Before we begin, I remind listeners that during the course of this call, we will make forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties regarding the operations and future results of McKesson.
In addition to the company's periodic, current and annual reports filed with the Securities and Exchange Commission, please refer to the text of our press release for a discussion of the risks associated with such forward-looking statements.
Finally, please note that on today's call, we will refer to certain non-GAAP financial measures, in which we exclude from our GAAP financial results, acquisition-related expenses, amortization of acquisition-related intangible assets and certain litigation reserve adjustments. We believe these non-GAAP measures will provide useful information for investors. Please refer to our press release announcing first quarter fiscal 2012 results available on our website for a reconciliation of the non-GAAP performance measures to the GAAP financial results. Thanks, and here is John Hammergren.
Thanks, Ana and thanks, everyone for joining us on our call. Today, we reported a strong start to fiscal 2012, with total company revenues of $30 billion and adjusted earnings per diluted share of $1.27. This performance was the result of solid contributions from both Technology Solutions and Distribution Solutions and was helped by our acquisition of US Oncology, which has given us one of the most comprehensive service offerings available to a large and fast growing segment in the healthcare industry, Specialty Distribution and Services.
Our first quarter performance positions us well for the remainder of the fiscal year. Due to a reduction in our estimated full year tax rate, we raised our annual guidance assumption and now expect adjusted earnings between $6.09 and $6.29 per diluted share. Before I turn the call over to Jeff for a detailed review of our financial results, I will provide some highlights from both segments of our business.
Distribution Solutions started the year with solid revenue and gross profit growth, keep it in mind that in last year's first quarter, U.S. Pharmaceutical benefited from a $51 million antitrust settlement. The U.S. Pharmaceutical team did a great job controlling cost in the first quarter, which resulted in relatively flat expenses in this business.
We're still very early in our fiscal year but we remain confident in our expectations. We anticipate generics will be a strong driver of our full year financial results, though as we've discussed heavily weighted to the back half of the fiscal year due to the launch calendar. We also expect that our broad range of value-added services for branded manufacturers should continue to contribute to steady levels of compensation. We continue to build new service offerings that create demonstrated value for our large Retail National Accounts, as well as our independent customers.
Recently, our U.S. Pharmaceutical business held its annual trade show for independent retail customers. Thousands of pharmacy owners gathered in our hometown of San Francisco to learn more about the latest industry developments. During the event, we shared our vision to further strengthen the role of independent pharmacists, who are vital members of America's evolving healthcare system. We unveiled a number of innovative and integrated solutions, including our mobile messaging solution and our physician outreach program, to help independents become more integrated with patients and providers in their communities. At the conference, we demonstrated how McKesson's technology and clinical solutions work hand-in-hand. By using technology to become more efficient, pharmacists can free up their time to focus on delivering valuable clinical services that help their patients lead healthier lives.
We were also able to leverage our vision center, located here at corporate headquarters, to further showcase McKesson's full complement of solutions for the healthcare industry. Many of these solutions are integrated for members of our Health Mart franchise, which received recognition from consumer reports and J.D. Power and Associates for its outstanding customer service this year and was announced as the Chain of the Year by Drug Store News during the trade show.
We also previewed our new store branded line of over-the-counter products for Health Mart, which we'll launch this fall. Our Health Mart franchise has approximately 2,800 stores and is growing. We believe Health Mart is a critical part of our solution set because it offers our independent pharmacy customers an effective way to successfully compete against larger national players.