McKesson Corporation

to McKesson's Second Quarter Fiscal 2026 Earnings Conference Call. Please be advised that today's conference is being recorded. At this time, I would like to turn the conference over to Jenny Dominguez, VP of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and welcome everyone to McKesson's Second Quarter Fiscal 2026 Earnings Call. Today I'm joined by Brian Tyler, our Chief Executive Officer, and Britt Vitilone, our Chief Financial Officer. Brian will lead off, followed by Britt, and then we'll move on to a question and answer session. Today's discussion will include forward-looking statements, such as forecasts about McKesson's operations and future results. Please refer to the cautionary statements in today's earnings release and presentation slides available on our website at investor.mckesson.com and to the risk factors section of our most recent annual and periodic SEC filings. or additional information concerning risk factors that could cause our actual results to materially differ from those in our forward-looking statements. Information about non-GAAP financial measures that we will discuss during this webcast, including a reconciliation of those measures to GAAP results, can be found in today's earnings release and presentation slides. The presentation slides also include a summary of our results for the quarter and guidance assumptions. With that, let me turn it over to Brian.

Thank you, Jenny. Good afternoon, everyone. Thank you for joining our call today. Earlier today, we reported strong second quarter results, which reflect sustained momentum in our business and the strength of our diversified portfolio. Consolidated revenues in the quarter increased 10% year over year to $103 billion, and adjusted earnings per diluted share increased 39% to $9.86. These results demonstrate the impact of focused execution across the enterprise with notably three of our segments delivering double digit adjusted operating profit growth as we continue to deliver against our strategic priorities. Given our first half performance and our confidence in the outlook for the year, we are raising our guidance on adjusted earnings per diluted share to $38.35 to $38.85. This builds on the 80 cent increase announced at our investor day in September. At the event, we also affirmed our company priorities and highlighted the differentiated capabilities that underpin McKesson's long-term growth. I'll walk you through our continued progress achieved in the second quarter. At that conference, we also introduced our new reporting structure that sharpens our strategic alignment and provides enhanced transparency into the growth areas of our business. The newly formed oncology and multi-specialty segment will focus on accelerating our strategy in the higher growth, higher margin segments. And we established the North American pharmaceutical segment, bringing together our pharmaceutical distribution capabilities in the U.S. and Canada. This quarter marks our first set of results under this structure, and I'm pleased with how our teams have come together to deliver consistent financial performance. We're confident that the new reporting structure will optimize our portfolio management and drive sustainable long-term value creation for shareholders. Rick will share more about the quarterly results in his remarks. But let me start by talking a minute about our people and culture. Team McKesson is the driving force for the continued innovation and excellence. It's the foundation of everything that we accomplish. Our best talent strategy continues to raise the bar across McKesson and is evident in the way our teams, T. And our board approach service integrity teamwork and performance that commitment is exemplified by our chairman of the board don Knauss. T. Who was recently honored with the be Kenneth West lifetime achievement award from the National Association of corporate directors, this is a well earned recognition of his leadership and I am grateful for his many, many contributions to mckesson. We believe that a strong culture is an integral part of our talent strategy, and it's reflected in how we support our communities and our people. In September, McKesson team members came together to participate in our annual community impact days. We supported more than 60 organizations nationwide, giving back to our communities and reinforcing the values that drive our everyday work. We support and care for our people through extensive resources and programs. And in October, employees across McKesson took part in our annual wellness day. We refer to it as your day, your way. It's now in its fifth year, and it underscores our continuing commitment to our team's well-being. Let's move on to our two strategic growth pillars, oncology and multispecialty, and our biopharma services. Our differentiated specialty platform remains a central pillar of our growth strategy and is now reported within the newly established oncology and multispecialty segment. Our differentiated capabilities have us well positioned to advance cancer care and expand into other therapeutic areas through scale, connectivity, and innovation. Foundational to our oncology and multispecialty business is our unparalleled distribution breadth. Specialty is a growing market with many unique medications and distribution requirements. We have market-leading capabilities and scale through our strong presence in the community provider setting, serving more than 14,000 providers across a wide range of specialties. Complementary to the core distribution capabilities are our group purchasing organizations, specialty pharmacy offerings, and infusion management services. Our diverse capabilities enable us to support a wide range of customers with varying needs and accessing specialty meds, including innovative therapies that are transforming care. This includes the launch and commercialization of cell and gene therapies. In August, we launched InspiroCare, a patient hub designed to simplify the complex journey of cell and gene therapies and provide personalized, compassionate support for patients. In September, we opened a world-class cold chain facility dedicated to cell and gene therapy distribution. This 12,000-foot facility is equipped with ultra-frozen and cryogenic storage technology specifically designed for the unique requirements of these medications, ensuring proper storage and the highest standards of compliance and care. Our best-in-class oncology platform provides support to community providers through a comprehensive suite of services, including practice management, clinical trial access, and industry-leading technology solutions that empower them to deliver world-class care. The U.S. Oncology Network has been leading the cancer care transformation for more than 15 years and is now supporting over 3,300 providers across more than 700 sites across the country. In October, the U.S. Oncology Network formed a collaboration with Blood Cancer United around a shared goal of strengthening cancer care and access to clinical trials close to home. The collaboration will provide personalized clinical trial education as well as clinical trial matching through the Sarah Cannon Research Institute. It will also offer patient navigation services to facilitate participation in clinical trials for patients with all types of blood cancer. During the second quarter, progress continued with the integration of Florida cancer specialists and Prism Vision, bringing both practice groups onto our distribution and GPO agreements to unlock the full value of our broader services and take advantage of the expanded relationships. Prism Vision recently expanded its footprint with the addition of Spokane Eye Clinic, located in Spokane, Washington, extending its reach now beyond the mid-Atlantic region. Spokane Eye Clinic has a growing team of 27 eye care specialists in four clinic locations. It marked an important milestone for Prism in building a comprehensive national eye care platform and continuing to enhance patient experiences. Let's move on to our biopharma services platform within our prescription technology services segment. Our leading technology platform is designed to make medicine more accessible and more affordable for everyone. What differentiates McKesson is the breadth and depth of our capabilities to address the most pressing challenges of access and affordability. Our network spans approximately 1 million providers and more than 50,000 pharmacies processing approximately 23 billion transactions annually. This connectivity and scale is the foundation that enables us to streamline access to life-saving therapies reduce friction across the healthcare continuum, and deliver measurable impact for our customers and patients. Our platforms combine tech-driven patient support services, automated prior authorization, copay, and voucher programs, all designed to help patients start, stay on, and afford their therapies. We complement these offerings with best-in-class third-party logistics, advanced analytics, and AI-enabled solutions that optimize efficiency and unlock value for our biopharma partners. This integrated approach positions McKesson as a trusted leader, not only solving today's challenges, but continuing to invest in the future, expanding our solutions for specialty therapies, modernizing technology, and leveraging innovation to advance health outcomes for all. Let me touch on our pharmaceutical distribution business in North America. This is a foundational business that continues to deliver strong growth underpinned by operational discipline and a differentiated value proposition. The sustained momentum of the business, driven by leading scale, strong operating leverage, and robust cash flow generation, enables us to continue to reinvest in the business to advance all of our enterprise priorities. We have made focused and significant investments in automation to support the growing complexity in the supply chain management. These investments improve operating efficiency, enhance customer experience, and unlock productivity in our workforce. An example of the advanced automation technologies we have implemented is the order storage retrieval system, which has been introduced in facilities across North America. The most recent application being in our US National Redistribution Center, serving as the core of our hub and spoke distribution model. This sophisticated system improves our service levels and accuracy, streamlines processes, and expands our storage capacity to better serve our customers. As an example, What would have normally taken eight physical human touches to complete a pick, pack, and ship process now only takes two human touches. We are committed to investing in technology and automation, which will continue to position us for long-term growth in the future. In August, our U.S. pharmaceutical business achieved a major milestone in the implementation of the Drug Supply Chain Security Act. We are now actively exchanging serialized transaction data with supply chain participants in compliance with these new FDA requirements. Behind this achievement was the extraordinary collaboration across the enterprise from technology and operations to regulatory affairs and customer support. Throughout this very complex implementation, we maintained exceptional service level accuracy with almost no disruption to our customers. We're proud to lead in this initiative that will enhance the safety, transparency, and integrity the pharmaceutical supply chain now let me provide a brief update on our portfolio actions our teams continue to actively execute on multiple work streams to separate the medical surgical business positioning it to become an independent well-capitalized operating company as shared in investor day we're targeting to exit the medical surgical solutions business through an initial public offering following a customary lock-up period we intend to exit our remaining interest through a spin-off or split-off transaction or possibly a combination of both. We anticipate that this separation could be completed by the second half of calendar 2027, subject, of course, to market conditions and customary regulatory approvals. In summary, McKesson delivered another strong quarter of performance. Our strategy and execution are driving outstanding results, and this momentum continues to build across the enterprise. We operate in the dynamic market and policy backdrop, and we're highly engaged in that process across the organization. Importantly, we're executing from a position of strength and credibility. We remain committed to collaborating closely with policymakers and stakeholders to advocate for changes that align with the values of our company and are good for healthcare. We're confident that our differentiated capabilities will continue to deliver value to customers and patients and be an important part of addressing healthcare's most pressing challenges. Lastly, I want to thank my fellow McKesson team members for their dedication and their contribution to advancing our mission. Together, we are advancing health outcomes for all, and we are excited about the opportunities that lie ahead. With that, I'll hand it over to Britt for some additional financial details.