McKesson Corporation (NYSE:MCK) Q4 2017 Earnings Conference Call - Final Transcript

May 18, 2017 • 05:00 pm ET


McKesson Corporation (NYSE:MCK) Q4 2017 Earnings Conference Call - Final Transcript


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Good afternoon, and welcome to the McKesson Corporation Quarterly Earnings Call. All participants are in a listen-only mode. (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 Mr. Craig Mercer, Senior Vice President, Investor Relations.

Craig Mercer

Thank you, Melissa. Good afternoon, and welcome to the McKesson Fiscal 2017 Fourth Quarter Earnings Call. I'm joined today by John Hammergren, McKesson's Chairman and CEO; and James Beer, McKesson's Executive Vice President and Chief Financial Officer. John will first provide a business update, and then James will review the financial results for the quarter and full year. After James' comments, we will open the call for your questions. We plan to end the call promptly after 1 hour at 6 p.m. Eastern Time.

(Forward-Looking Cautionary Statements)

Please note that on today's call, we will refer to certain non-GAAP financial measures. In particular, our fiscal 2017 adjusted earnings excludes 4 items, amortization of acquisition-related intangibles; acquisition-related expenses and adjustments, claim and litigation reserve adjustments, and LIFO-related adjustments. Also, James will discuss our operating performance, further adjusting for the impact of net charges associated with the Cost Alignment Plan that we announced in March 2016 as well as the noncash pre-tax goodwill impairment charge we took related to our EIS business within our Technology Solutions segment during the second quarter. For fiscal '16, we excluded the gains on the sales of 2 businesses.

Consistent with how we've discussed our fiscal '17 results in prior earnings calls, which reconciles adjusted earnings to adjusted earnings excluding these unusual items, the supplemental presentation is useful when reviewing the fiscal 2017 versus fiscal 2016 results discussed today. In connection with the issuance of our fiscal 2018 outlook and in consideration of investor feedback, benchmarking relative to peer companies and in line with management's view of our operating performance, we are revising our adjusted earnings definition.

The revision will principally exclude gains from anti-trust legal settlements, restructuring charges and other adjustments, including asset impairments and gains or losses on disposal of businesses or assets. We filed a second 8-K with the SEC today, which includes the full text of our revised definition of adjusted earnings as well as a recast of quarterly and full year fiscal 2017 results. This will allow you to compare our fiscal 2018 outlook to our revised adjusted earnings for fiscal 2017.

For reference, Slide 14 of the supplemental presentation provides a visual walk from fiscal 2017 adjusted EPS to adjusted EPS excluding unusual items. Then, it bridges that measure to the fiscal '17 revised adjusted EPS.

We believe the earnings press release, supplemental slides and the recast 8-K, which include -- which all include non-GAAP measures, will provide useful information for investors with regard to the company's underlying operating performance and comparability of financial results period-over-period. Please refer to these materials, which may be found in the Investors section of our company website, for further information and a reconciliation of the non-GAAP