McKesson Corporation (NYSE:MCK) Q2 2020 Earnings Conference Call - Final Transcript

Oct 30, 2019 • 08:00 am ET

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McKesson Corporation (NYSE:MCK) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to McKesson's Q2 Earning Call. [Operator Instructions].

At this time, I'd like to turn the call over to Holly Weiss. Please go ahead.

Executive
Holly Weiss

Thank you. Suzanne. Good morning and welcome everyone to McKesson's Second Quarter Fiscal 2020 Earnings Call. Today, I'm joined by Brian Tyler, our Chief Executive Officer; and Britt Vitalone, our Chief Financial Officer. Brian will lead off, followed by Britt, and then we will move to a question-and-answer session. Today's discussion will include forward-looking statements, such as forecast about McKesson's operations and future results. Please refer to the cautionary statements in today's press release and our slide presentation, and to the risk factors section of our periodic SEC filings for additional information concerning risk factors that could cause our actual results to materially differ from those in our forward-looking statements.

During this call, we will discuss non-GAAP financial measures. Additional information about our non-GAAP financial measures, including a reconciliation of those measures to GAAP results is included in today's press release and presentation slides, which are available on our website at investor.mckesson.com.

With that, let me turn it over to Brian.

Executive
Brian S. Tyler

Thank you, Holly. Good morning, everyone. Thanks for joining us on our call today. Today, we reported second quarter total company revenues of $57.6 billion. Our adjusted earnings per diluted share was $3.60, which was in line with our expectations. And when excluding the $0.33 prior-year benefit from the reversal of a contractual liability associated with McKesson's investment in Change Healthcare, second quarter results per diluted share increased more than 10% year-over-year. Our first half fiscal '20 results give us confidence in our reaffirm fiscal '20 full-year outlook of $14 to $14.60 of adjusted earnings per diluted share. This continues to reflect year-over-year adjusted operating profit growth in each of our segments.

Before I go deeper into our second quarter results, I want to take a few minutes to discuss one topic, I know, is top of mind for everyone and that is opioid litigation. Last week, McKesson, along with two other distributors, reached a collective $215 million settlement with two Ohio counties, Cuyahoga and Summit, in the first track of the multi-district opioid litigation. McKesson's portion of the settlement was $82 million, which was recorded in our second quarter results. We strongly dispute the allegations made by these two counties; however, settling the bellwether trial was, in our view, an important stepping stone to achieving a broad resolution to opioid litigation and to accelerating relief efforts for the people and communities impacted by this public health crisis. Over the next few months, we'll be working hard with other parties on the settlement framework that includes states and their sub-divisions. While we have made good progress, there are many details and variables that remain open and still need to be addressed. We're optimistic that a broad resolution can be achieved, and that remains our goal. All along, we've said the goal is to ring-fence the risk. However, to the extent the broad resolution