McKesson Corporation

their flexibility, and ability to manage through change. The first half of fiscal 2021 has certainly played out differently than the original expectations we provided to you in May. You'll recall that based on the positive signs of recovery at the end of our first quarter, we raised our guidance for fiscal 2021. In our second quarter, we again saw volumes increase compared to the low points early in the first quarter. While patient mobility and prescription volume showed improvement and stability, the recovery continues to be nonlinear is the word we've adopted. And our second quarter results are a good example of the unpredictability of the pace and the trajectory of the recovery. In addition, the pandemic has caused customer needs to evolve and we've pivoted quickly to meet the incremental demands and needs. Investments in the business and customer relationships, particularly in our medical business, have positioned us well to serve our customers during this unprecedented time. New demand for product categories such as COVID-19 tests and elevated demand for PPE have contributed meaningfully to our results year to date. While short-term upside, we do not anticipate the elevated levels of demand for these products in the long term. Our results year to date are underpinned by three dynamics. First and foremost, the shape and pace of the recovery has been different than we had originally contemplated in May. Following a sharp recovery to the end of the first quarter, we continue to see modest improvement in the second quarter, but with signs the recovery will not fully happen in our fiscal 21, most likely extending well into the calendar year 21. And given current COVID-19 infection rate volatility, we expect a nonlinear recovery. Second, the fundamentals in the business remain solid and our execution has continued to improve. Lastly, discrete one-time gains in the second quarter and short-term opportunities present near-term upside for the fiscal year. As a result of our performance in the quarter and our improved outlook across the business, we are raising and narrowing our fiscal 2021 adjusted earnings per diluted share guidance range to $16 to $16.50 per diluted share. This is up from our previous range of $14.70 to $15.50 per diluted share. Since the onset of the pandemic, McKesson has partnered with government agencies at the federal, state, and local level, along with other industry leaders to help find solutions to the most complex and pressing issues the crisis presented. This critical work once again speaks to the important role we play in the healthcare supply chain and to the depth of McKesson's expertise in sourcing, picking, packing, and distributing supplies to sites of care across the U.S. Our role in the supply chain was highlighted in the quarter through expanded partnerships with the U.S. government, specifically supporting Operation Warp Speed. Similar to our role in the 2009 to 2010 period, the H1N1 pandemic, the Centers for Disease Control and Prevention engaged us to expand our existing partnership under the Vaccines for Children program to support the U.S. government's Operation Warp Speed team as a centralized distributor of future COVID-19 vaccines and ancillary supplies needed to administer those vaccines. McKesson's role in the H1N1 response was a proud moment in our history over 10 years ago, and we're very honored to serve in a similar capacity as we help support the fight against the COVID-19 pandemic. I do want to take a moment to just clarify the scope of McKesson's involvement in Operation Warp Speed. We will be the centralized distributor for refrigerated and frozen vaccine types, once approved by the FDA. Ultra frozen vaccines, which are those requiring temperatures of minus 60 degrees Celsius or colder, are not within the scope of McKesson's contract with the CDC. In the centralized model, the US government directs McKesson on the distribution of the vaccines and related supplies to point of care sites across the country. McKesson will make no allocation or prioritization decisions, and we will not have any influence on which vaccine is shipped to which location. While it's still early in the process and a vaccine has not yet been approved for distribution, our role in Operation Warp Speed has been and will continue to be our company's top priority since we were selected by the CDC in August. We've been working to scale up the infrastructure necessary to be ready to distribute approved vaccines as soon as they are available. Given the uncertainty around the timing and volume of vaccines that may become available, future earnings tied to the distribution of COVID-19 vaccines as a centralized distributor for the US government are not reflected in our current outlook. McKesson was also selected by the US government to manage the assembly and distribution of the ancillary supplies needed to administer the future COVID-19 vaccines. We're partnering with the Department of Health and Human Services, or HHS, to help equip healthcare professionals with the supplies they need to safely and efficiently administer COVID-19 vaccines once they're available. Supplies like syringes, alcohol prep pads, face shields, and more will be selected and grouped together as directed by the HHS for future distribution to point of care settings across the country. We quickly ramped up our capacity, outfitting and staffing four distribution center locations for assembling and storing the ancillary kits to be used in the administration of the COVID-19 vaccines once approved. Each kit contains enough supplies to be used for the administration of 100 plus vaccines. Our teams have been hard at work assembling these kits as part of the preparation needed for when a vaccine is approved. Given the scope of our work with the HHS is well defined and that the work has begun, the economics from this contract are factored into our improved outlook for fiscal 2021. We are honored and proud to serve the U.S. government in this dual role, and we believe it will help streamline delivery to front lines and provide the most expeditious access possible to the COVID-19 vaccines. Before I elaborate on our second quarter results, I wanted to provide just a brief update on our Board of Directors. In mid-October, our Board of Directors welcomed Linda Montia as a new independent director. Linda most recently served as the Senior Vice President and Chief Operating Officer for Manulife Financial Corporation, where she played a critical role in defining Manulife's corporate strategy and oversaw its innovation portfolio. She brings over 25 years of experience managing extensive financial services, operations, and digital technology. Linda's appointment demonstrates our continuing commitment to refresh and diversify the experience, backgrounds, and perspectives on our board. Now, let's get into the business. I'll remind you that this is our first quarter reporting in the new segment structure we announced back in July. I'll summarize the second quarter and then I'll turn it over to Britt to provide more details. U.S. pharmaceuticals results in the quarter exceeded our expectations and reflect improved script and patient mobility trends versus the levels we experienced in the first quarter. Specialty volumes, particularly oncology, have continued to be resilient throughout the pandemic. Oncology patient visits, inclusive of telehealth visits, return to pre-COVID levels in the quarter, and our provider solutions and U.S. oncology business continue to grow and are well-positioned as innovative specialty products and biosimilars come to market. Our U.S. oncology research team recently celebrated a significant milestone. We have now been part of the trial process for 100 FDA-approved cancer therapies, This achievement is a result of the hard work and the dedication to research from more than 165 research locations, conducting and participating in over 1,600 clinical trials for cancer therapy. Our Health Mart franchises continue to play a vital role in community health care as they roll out COVID-19 testing efforts and expand immunization capabilities ahead of this year's influenza season. Transitioning to our international segments. As part of our segment realignment, we brought together our strong presence in non-U.S.-based drug distribution and retail operations in Canada and Europe. Together, these businesses are positioned to further leverage the company's global footprint to drive value across key differentiators like the company's owned retail pharmacy assets. I remind you, as part of the reorganization in August, we named Rebecca McKillican as the Chief Executive Officer for McKesson Canada. She succeeded Dominic Pia, who retired in August. I'm encouraged by the performance of our international business as we found ways to meet the changing customer demands and contain our costs. We continue to invest in the digitization of healthcare in both Canada and Europe. We've invested in new state-of-the-art distribution centers to support digital growth in our e-commerce platforms. In Canada, our Well.ca business was recognized for the second year in a row as a leader in digital customer experience. And in Europe, our Echo by Lloyds pharmacy platform in the UK remains the UK's fastest-growing pharmacy. I'm pleased to announce that on November 1st, we completed the creation of a joint venture with Walgreens Boots Alliance. to combine our pharmaceutical wholesale businesses in Germany. As a reminder, WBA owns 70% controlling equity interest in the joint venture, and McKesson holds the remaining 30% ownership interest. We have a continuous process in place to look at, review, and evaluate our portfolio and our strategy. Sometimes the outcome is we find assets that we're not the natural owner of, or as was the case in this transaction, We believe that combining our German wholesale businesses with that of WBA is the right decision to secure the long-term success of both businesses. The combined businesses will strengthen the ability to compete and deliver high customer satisfaction through evolving our customer value proposition and delivering on operational excellence. Let me move to medical. Demand continued to improve across the business in the quarter as physician offices reopened across the U.S., The pandemic has also created new demand for products like COVID-19 tests and an unprecedented level of demand for PPE across the segment, both of which we view as near-term drivers of growth in the segment. We're proud to have a leading position in the distribution of lab equipment and solutions in the provider space. Over the past several years, we've developed relationships with many lab partners and helped position our providers with the tools they need to deliver better patient outcomes. Our investments in our lab business and in our private brand portfolio continue to position us to serve our customers' evolving needs, particularly in times like these. Also, to meet this incremental demand, we work quickly to strengthen our sourcing partnerships around the globe. We've built our inventory across several product categories to be ready for incremental and often unpredictable levels of demand from our customers. improved patient mobility, and a continuation of near-term opportunities for McKesson to meet our customers' evolving demands contribute to the revised outlook for the segment. Turning to prescription technology solutions, we'll refer to as RXTS for shorthand, which brings together our Relay Health Pharmacy, our CoverMyMeds, and our RX Crossroads businesses. I want to just spend a minute here on the evolution of these businesses into the reportable segment it is today. Over time, we have acquired capabilities that together create a broad set of commercial services businesses. Relay Health is an asset that's been in the McKesson family dating back to 2006. This business processes over 19 billion transactions a year and connects us to over 50,000 U.S. pharmacies, giving us access to the workflow of the vast majority of pharmacies in the U.S., with the goal of delivering value-added services directly into this pharmacy workflow. In 2017, we acquired Cover My Med, whose mission is to help patients get access to the appropriate drugs for their care by automating and accelerating the prescription approval process, known as electronic prior authorization, an otherwise very manual and very time-consuming process. This business gave us access to the workflow of over 700,000 providers by automating the insurance approval process for drug coverage. And most recently, in 2018, we acquired RxCrossroads, a business that expanded our services and solutions for our biopharma partners and gave us disease state expertise specifically focused on specialty therapies. Bringing these businesses together under one leadership team allows us to have a more cohesive strategy and a highly coordinated go-to-market effort. Together, these businesses help to connect pharmacies, providers, payers, and biopharma for a next generation patient access, and adherence solutions. Last quarter, I talked about one of these solutions that we've continued to invest in, a product we call Access for More Patients, or AMP, and how we've been able to reduce the average time to therapy by 18 days. Just one year ago, we had one brand on the platform. Today, we have several brands live and a good growing pipeline Expanding our brand support programs for our biopharma partners help to offset the impact of lower prescription volume trends, specifically new prescriptions in the quarter. As an important part of our strategy, we are continuing to invest in these businesses so that we can provide innovative solutions for biopharma, and these investment dollars are reflected in our results in the segment year to date. Summarizing at the enterprise level, while we expected challenges in the quarter, we significantly exceeded our expectations, and it is in large part due to the execution of our 80,000 employees. Our teams move quickly and decisively to react to evolving customer needs and our expanded government partnerships. I continue to just be so impressed by our teammates, particularly those on the front lines, for their unwavering focus and dedication during this Incredibly challenging time. And as part of our appreciation, we again made special payments to our frontline employees, recognizing their courage and their service to our company, our customers, and frontline caregivers for these past several months. I mentioned how the second quarter was a good example of the non-linearity of the recovery, as our results far exceeded our original and even revised expectations. While we're encouraged by the positive trajectory of the recovery, we continue to believe a full recovery back to pre-COVID levels will take longer than we originally contemplated and is unlikely to occur within our fiscal year. We continue to expect in the second half of the year as compared to the prior year, driven by an improved market, near-term demand from our customers and our current work in the U.S. government assembling the ancillary kits to go along with future COVID vaccines once approved. While some of the tailwinds I mentioned are expected to be near term, we believe we have made the investments necessary to position us as a partner of choice for our customers and manufacturers throughout this time. On our first quarter call, I talked about the biggest theme through the pandemic would be change. And that I thought McKesson was well positioned to respond and react to that change. And I believe the second quarter was a clear example of how McKesson shines when faced with challenges and new opportunities. Despite an evolving market landscape, we remain focused on executing against our priorities, which now proudly includes playing an even larger role in the fight against the COVID-19 pandemic, leveraging our deep expertise as we partner with the U.S. government on future COVID-19 vaccine efforts. I'm so proud of the execution I've seen across the business in the first half of fiscal 2021 and the dedication of our employees remains unmatched in my view. Thank you for your time this morning, and with that, let me hand it over to Britt to elaborate. Thank you, Brian, and good morning, everyone.

We're pleased with our adjusted operating profit and adjusted earnings per share results in the second quarter. We delivered growth over our prior year results and exceeded the expectations that we laid out on our Q1 earnings call, despite an extremely volatile and challenging macro environment. We couldn't be more proud of the way our teams have executed and continue to deliver and innovate through this unprecedented period of uncertainty. We delivered solid core performance across our businesses in the quarter, including new product volumes and elevated demand in our medical surgical segment. This new volume includes an increase in the sales of COVID-19 tests and increased volumes of personal protective equipment as we continue to respond to the needs of our customers during the pandemic. We also recognize gains on equity investments within our McKesson Ventures portfolio, and I'll provide further detail on this. As a reminder, in our first quarter, we were impacted across our businesses by economic lockdowns and social distancing, which led to decreased healthcare utilization across the geographies that we operate in. However, in June, we began to see an acceleration of demand as volumes recovered earlier than we originally anticipated. As I mentioned during our Q1 earnings call, we expected a nonlinear recovery from the effects of the pandemic over the remainder of our fiscal year. And we saw the nonlinear course of the recovery continue to play out in our second quarter results. Prescription volumes recovered from their lowest levels earlier in our fiscal year, although not back to pre-COVID levels. And primary care patient visits continued to improve at a rate faster than we had anticipated. As Brian mentioned, in the second quarter, we observed increased volumes for COVID-related products particularly COVID tests, as we stocked up to meet demands for additional testing and supplies, including personal protective equipment. We continue to respond to the dynamic and fluid environment, and we're pleased with our execution throughout the first half of our fiscal year. This morning, I'll provide commentary on our second quarter results and an update on the key assumptions that support our outlook for the remainder of fiscal 2021. And my comments today will relate to our new segment structure. Let's turn now to our second quarter results, a summary of which, including updated guidance, can be found in the Investors section of our website. And I'll start by pointing out two items that impacted our gap-only results in the quarter. First, within U.S. Pharmaceutical, we recorded a pre-tax charge of $50 million for an estimated liability related to the New York State Opioid Stewardship Act, or OSA. The charge is the estimated share of the New York OSA surcharge for calendar years 2017 and 2018. As a reminder, we recorded an accrual in the first and second quarter of fiscal 2019 for the estimated portion of the annual assessment under the OSA. The OSA was later ruled unconstitutional, and the accrual was reversed in the third quarter of our fiscal 2019. That ruling was reversed in September of 2020, and therefore we took a charge in our fiscal second quarter. Secondly, within our international segment, we recorded a goodwill impairment charge of $69 million, which was associated with the segment realignment. Now to a discussion of adjusted earnings results for the second quarter, starting with our consolidated results on slide four. Consolidated revenues of $60.8 billion were up 6% compared to the prior year, primarily due to market growth and higher volumes from retail national account customers in our U.S. pharmaceutical segment. Adjusted gross profit increased 4% year over year, driven by growth in our medical surgical segment, which saw increased demand for COVID-19 tests and higher volumes from customers in the U.S. pharmaceutical segment. Adjusted operating expenses increased 5% year-over-year, led by increased technology spend, which was partially offset by a reduction in operating expenses due to the impact of COVID-19. Adjusted operating profit was $953 million for the quarter, an increase of 3% compared to the prior year. When excluding the $39 million contributed by Change Healthcare in the prior year, which was previously recorded in Other, Adjusted operating profit grew 8%, which was ahead of our expectations. Interest expense was $50 million in the quarter, a decline of 22% compared to the prior year due to lower commercial paper balances. And we now expect interest expense in fiscal 21 to be between $220 and $240 million. Our adjusted tax rate was 7.2% for the quarter in the range that we indicated on our first quarter earnings call in August. During the quarter, we realized discrete tax benefits of approximately $129 million, and we continue to assume a full-year adjusted tax rate of approximately 18% to 20%. Second quarter adjusted earnings per diluted share was $4.80, which was up 33% in the quarter compared to the prior year. driven by a lower share count, a lower tax rate, and operating performance, led by the growth in the medical surgical solution segment. These items were partially offset by the lapping of the prior year contribution from the company's investment in Change Healthcare. Second quarter adjusted earnings per diluted share also includes net pre-tax gains of approximately $49 million, or 22 cents per diluted share, associated with McKesson Ventures equity investments. Wrapping up our consolidated results, second quarter diluted weighted average shares were $163 million, a decrease of 11% year-over-year, which was driven by the successful exit of our investment in Change Healthcare, lowering our shares outstanding by approximately 15.4 million shares, and due to prior year share repurchases. Next, I'll review our second quarter segment results, which can be found on slides five through nine. As a reminder, effective with the second quarter of fiscal 2021, McKesson revised its segment reporting structure. We now report results in four reportable segments, which include U.S. pharmaceutical, international, medical surgical solutions, and prescription technology solutions, or RXTs. And I'll start with U.S. pharmaceutical, where revenues were $48.1 billion, up 5%, driven by market growth and higher retail national account volumes, partially offset by brand-generic conversions. In our specialty businesses, particularly in our U.S. oncology network, we saw patient visits approach pre-COVID levels. Adjusted operating profit increased 3% to $658 million, driven by growth and specialty, partially offset by higher operating expenses in support of our strategic growth initiatives. And the segment adjusted operating margin for the second quarter was 137 basis points, which was a decrease of three basis points. Next, on to international, where revenues were $9.5 billion, an increase of 2% year-over-year. On an FX adjusted basis, revenues decreased 1%, primarily driven by lower volumes in the Canadian pharmaceutical distribution business, which was largely due to the exit of an unprofitable customer at the beginning of the fiscal year. This was partially offset by higher volumes in the European pharmaceutical distribution and retail pharmacy businesses. Adjusted operating profit increased 20% year-over-year to $116 million. On an FX adjusted basis, adjusted operating profit increased 19% to $115 million, driven by lower European operating expenses, including continued cost reduction initiatives and cost mitigation efforts in response to COVID-19. The segment adjusted operating margin for the second quarter was 122 basis points, which was an increase of 18 basis points. As Brian mentioned in his remarks, Yesterday, we announced the completed contribution of our German wholesale business to a newly formed joint venture with Walgreens Foods Alliance. WBA now holds a 70% controlling equity interest in the JV, and McKesson holds the remaining 30%. Going forward, McKesson will no longer consolidate the operating results of its German wholesale business. We'll recognize the 30% share of the JV earnings and losses in other income within our international segment. Moving on to medical surgical solutions. We continue to see trends improve during the quarter. According to an October Acuvia report, primary care patient visits reached approximately 91% of the pre-COVID baseline. Our medical surgical business continues to play a vital role in the COVID-19 pandemic, ramping up to meet customer demand with our delivery of COVID-19 tests and personal protective equipment. Revenues were $2.5 billion in the corner, up 23%, driven by higher volumes of COVID-19 tests and personal protective equipment in both our primary care and extended care businesses. Adjusted operating profit increased 27% to $210 million, driven by demand for COVID-19 tests, early flu season volumes, and contributions from the extended care business. And the segment adjusted operating margin was 829 basis points, an increase of 22 basis points. Next, prescription technology solutions. Revenues were $668 million, an increase of 7%, driven by new brand support programs, which were partially offset by the impact of lower prescription volume trends. Adjusted operating profit decreased 10% to $104 million, which was driven by higher operating expense investment to support the company's biopharma service growth initiative. For the past several quarters, we've outlined our strategic investment into the products and services within RxDS, resulting in higher operating expenses to support future growth. We expect to continue to invest in the expansion of our technology offerings for our retail and biopharma customers to support the future operating profit growth of this segment. The segment adjusted operating margin for the second quarter was 15.57%, down from 18.37% in the prior year. And moving on to corporate. McKesson recorded $135 million in adjusted corporate expenses in the quarter, an increase of 2% year-over-year, primarily driven by increased technology costs and lower interest income. This increase was largely offset by net gains of approximately $49 million on equity investments within our McKesson Ventures portfolio. Our McKesson Ventures portfolio holds equity investments in several growth-stage digital health and services companies, and we're pleased with the portfolio results and the insights obtained. While mark-to-market valuations in this quarter resulted in gains from three of our investments, the impacts to our consolidated financials can be influenced by the performance of each individual investment quarter to quarter. As a result, McKesson's investments may result in gains or losses, the timing and magnitude of which can vary for each investment. It's difficult to predict when gains or losses on our venture portfolio companies may occur, and therefore, our practice has been and will continue to not include ventures portfolio activity in our guidance. And finally, we reported opioid-related litigation expenses of $41 million in the quarter, and for fiscal 2021, we continue to anticipate that opioid-related legal costs will be approximately $160 million. Turning now to cash, which can be found on slide 11, we ended the quarter with a cash balance of $3.1 billion. For the first half of fiscal 21, we had negative free cash flow of $306 million. Our working capital metrics in resulting free cash flow vary from quarter to quarter and are impacted by timing, including the day of the week that marks the close of a quarter. Looking at the cash flow dynamics, we saw higher levels of inventory this quarter, primarily resulting from the increased quantities of COVID testing and personal protective equipment, and our participation in Operation Warp Speed. As we prepare for continued larger quantities of personal protective equipment, and operation warp speed activity, we may experience additional working capital volatility. Year to date, we made $265 million of capital expenditures led by internal investments in areas such as technology and continued investment in our strategic growth initiatives. We also made investments in data and analytics capabilities across the enterprise. For the first six months of the fiscal year, we returned $388 million of cash to our shareholders through $248 million of share repurchases and the payment of $140 million in dividends. We have $1.3 billion remaining on our share repurchase authorization, and we continue to expect diluted weighted shares outstanding in the range of 161 to 163 million. Let me now turn to our outlook for the balance of fiscal 2021. As we've seen over the past several months, the trajectory of the COVID virus can change quickly, as evidenced by recent increases in case numbers in many parts of North America and Europe. On our Q4 FY20 and Q1 earnings calls, we outlined two assumptions that underlie our guidance for fiscal 2021 that we are reiterating today. First, we do not assume a new wave of COVID-19, which would lead to shelter at home and economic lockdowns, which would preclude patient mobility and consumption of healthcare services. And second, we do not assume any systemic customer insolvency events. We continue to believe that the recovery will take longer than initially anticipated, and it will not be linear, as the full impact of the pandemic is likely to persist beyond the fiscal year. The nonlinear nature of the recovery continued in our second quarter. As a result of our second quarter performance and outlook for the remainder of the year, including near-term opportunities related to COVID-19 demand, we're increasing our adjusted earnings guidance range to $16 to $16.50 from our previous range of $14.70 to $15.50. While our guidance does not take into account any revenues or earnings related to future COVID-19 vaccine distribution, it does include volumes from our kitting program in our medical surgical segment, which I'll provide more details on shortly. We anticipate consolidated revenues to increase two to 4% for fiscal 2021. We now expect the consolidated adjusted operating profit will grow two to 6% for the full year when excluding the results of change healthcare from the prior year. an increase from our prior guidance of a decline between 1% and 4%. We continue to anticipate enterprise-adjusted operating profit to grow sequentially throughout fiscal 2021. And now on to the segments. In our U.S. pharmaceutical segment, we expect revenue growth of 3% to 6% and segment-adjusted operating profit to grow 1% to 4% compared to the prior year. This takes into account improved volumes, particularly in our specialty businesses. In our international segment, we expect a revenue decline of 5% to 10% year-over-year and segment-adjusted operating profit to be flat to 4% growth, driven by the performance in our European business. Let me now provide some details on our medical-surgical segment. As discussed in my opening remarks, throughout the quarter we saw increasing volumes of COVID-19 tests. We expect these sales to be a near-term opportunity in the segment, and it's factored into our guidance for the remainder of fiscal 2021. We've also seen increased volumes of personal protective equipment. This category remains vital as we support our customers during the pandemic. We expect that volumes will continue to fluctuate through the balance of the year. As the largest seasonal flu vaccine distributor in the U.S., we continue to prepare for the influenza season, which is particularly important this year due to the impacts of COVID-19 on the nation's healthcare system. While it's too early to predict how the flu season will progress, we're actively preparing to meet the needs of our customers. As Brian mentioned in his remarks, we're also partnering with HHS on preparing and storing ancillary kits to be used in the administration of a future COVID-19 vaccine. We've included in our guidance a net benefit to adjusted earnings per diluted share of approximately 15 to 20 cents in the second half of our fiscal year related to our partnership with HHS. As a result, we now expect fiscal 2021 medical surgical segment revenue to increase between 20 and 25 percent and segment adjusted operating profit to grow in the range of 8 to 18 percent. In our prescription technology solution segment, we expect segment revenue to grow 5% to 10% and segment adjusted operating profit in the range of down 5% to flat. We expect improvement in this segment over the second half of the fiscal year as we continue to realize the benefits of our strategic investments. As this is our first quarter reporting prescription technology solution segment, I want to provide some background on the drivers within this segment. Brian discussed in his remarks how this segment brings together our Relay Health Pharmacy, Cover My Meds, and RxCrossroads businesses. Volumes in our Relay Health and Cover My Meds businesses are driven by pharmaceutical transactions, including prior authorizations. Volumes in these businesses are also driven by adding drug brands to the existing platforms and services that we offer to our biopharma and pharmacy partners. Moving on to corporate. We now expect corporate expenses in the range of $625 to $675 million. Our corporate guidance takes into account increased technology investments and the impact of our second quarter equity investment gains in our McKesson Ventures portfolio as previously discussed. Let me wrap up our outlook by turning to cash flow. We continue to expect free cash flow of approximately $2.3 to $2.7 billion. As a reminder, we historically have generated the majority of our cash in the fourth quarter of our fiscal year. This consistent cash flow generation provides the financial flexibility to continue investing in our strategic initiatives which position our business for long-term growth. Our investment-grade credit rating remains a priority and underpins our financial flexibility. We have two bonds totaling approximately $1 billion, which mature during the second half of our fiscal year. We intend to utilize a portion of our free cash flow to modestly de-lever by up to $500 million, further strengthening our balance sheet and financial position. And we remain committed to returning capital to shareholders through our modest dividend and through share buybacks. In closing, we're pleased with the results of our fiscal second quarter and we're confident in our updated outlook for the remainder of the fiscal year. Our focus and execution should drive another full year of operating profit growth, despite a challenging and competitive environment. We will continue to invest in high growth, high margin markets, and strategic areas that will further leverage our differentiated positions in oncology and biopharma services. We're proud of our expanding partnerships as we work on the COVID-19 vaccine effort and continue to be an important part of the pandemic response to maintain supply chain stability. And with that, Holly, let me turn the call back to you for Q&A.

Thank you. We will now take questions. In the interest of time, please limit yourself to just one question to allow others an opportunity to participate. Operator?