Q2 2012 Earnings Call
October 25, 2011 5:00 pm ET
Jeffrey C. Campbell - Chief Financial Officer and Executive Vice President
Ana Schrank - Former Vice President of Investor Relations
John H. Hammergren - Chairman, Chief Executive Officer and President
Ross Muken - Deutsche Bank AG, Research Division
Eric W. Coldwell - Robert W. Baird & Co. Incorporated, Research Division
George Hill - Citigroup Inc, Research Division
Thomas Gallucci - Lazard Capital Markets LLC, Research Division
Steven Valiquette - UBS Investment Bank, Research Division
Ricky Goldwasser - Morgan Stanley, Research Division
Lawrence C. Marsh - Barclays Capital, Research Division
Glen J. Santangelo - Crédit Suisse AG, Research Division
Albert J. Rice - Susquehanna Financial Group, LLLP, Research Division
Lisa C Gill - JP Morgan Chase & Co, Research Division
Robert P. Jones - Goldman Sachs Group Inc., Research Division
Previous Statements by MCK
» McKesson's CEO Discusses Q1 2012 Results - Earnings Call Transcript
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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.
Thank you, Rebecca. Good afternoon, and welcome to the McKesson Fiscal 2012 Second Quarter Earnings Call. With me today are John Hammergren, McKesson's Chairman and CEO; and Jeff Campbell, our CFO. John will first provide a business update, and we'll then introduce Jeff who will review the financial results for the quarter. After Jeff's comments, we'll open the call for your questions. We plan to end the call promptly after 1 hour at 6:00 p.m. 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 second 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.
John H. Hammergren
Thanks, Ana, and thanks, everyone, for joining us on our call. I'm pleased with the continued momentum in our business. For our second quarter, we achieved total company revenues of $30.2 billion and adjusted earnings per diluted share of $1.63. This performance is a result of strong contributions from both Technology Solutions and Distribution Solutions and was helped by our acquisition of US Oncology. Based on the momentum from our first half results, we are now raising our previous outlook for the fiscal year and now expect adjusted earnings between $6.19 and $6.39 per diluted share for the fiscal year ending March 31, 2012.
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. In Distribution Solutions, we were particularly pleased to see steady demand across all of our pharmaceutical and Medical-Surgical distribution businesses. We know that there are concerns in the industry about utilization trends, but we've seen healthy demand in our diverse set of distribution businesses. In addition to strong revenue growth, Distribution Solutions' operating margins expanded 19 basis points with U.S. Pharmaceutical, Canada, Medical-Surgical and Specialty Health all contributing to that outstanding performance.
Our U.S. Pharmaceutical Distribution business continues to perform in an exceptionally high level. Again this quarter, the U.S. Pharmaceutical team did a great job controlling costs, resulting in a relatively flat expense for the quarter, which contributed nicely to the segment's operating margin expansion. We continue to benefit from our long-standing relationships with branded manufacturers, delivering great value to them and earning steady levels of compensation in return. Overall, U.S. Pharmaceutical is right on target for the year.
I'm extremely pleased with the result of our Specialty Health business, which includes the operations of US Oncology. We began this year with a set of priorities focusing on integrating the 2 companies and creating an expanded customer base and an expanded value proposition to these important customers that brings together all of our assets of both businesses. Thus far, we made great progress combining the 2 organizations, and the majority of the integration work is now complete and we are realizing synergies from the transaction. We're also creating real momentum in the marketplace.
At the end of the second quarter, our Specialty business launched a new name and offering to the marketplace, reflecting the expanded business unit created by merging McKesson Specialty Care Solutions and US Oncology. Now called the McKesson Specialty Health, the business empowers providers, from hospitals to community oncologists to other multi-specialty providers, to advance the science, technology and quality of care through innovative clinical, research, business and operational solutions. Our customers are responding very positively to our new, broader offering.
While we've expanded our value proposition considerably, I would note that generics continue to play an important role in Specialty's performance. We've had strong results year-to-date, and we expect the trend to continue for the remainder of the fiscal year.