McKesson Morgan Stanley 24th Annual Global Healthcare Conference

Well, I just want to thank you for hosting us this morning. We appreciate the opportunity to share a little bit about the McKesson strategy and recent performance, and we thank you all for being here early on a Monday morning. I appreciate your interest in McKesson.

Sure. I can start with the quarter.

Sure. I'll turn it over to BT on Precision Medicine Group.

Overall for the quarter, for Q1, we are pleased with our business performance. We have momentum across the board. As you think about our four reportable segments, three of the four were double-digit growth across North American Pharmaceutical, Oncology & Multispecialty, and our RxTS business. As you think, and you're correct, we did raise for the full year, given our strong performance in Q1 and our confidence for the rest of the year. The $0.40 raise brings our full-year EPS to $44.20-$45, which translates to a growth of roughly 13%-15%. If you normalize for two things, the Norway exit as well as our gain on sale in US Oncology last year, this quarter in Q2, that is a 15%-17% increase year-over-year.

That is, call it, inline, slightly above our long-term target of EPS growth of 13%-16%. Erin, overall, we are extremely pleased. I will turn it over to BT on PMG. Just one overarching comment. When we think about M&A or just general assets within our portfolio, it is important that we are strategic about it, disciplined about it as well, where the assets, the platforms, are interoperable and are complementary to each other across distribution, practice management, data and analytics, clinical trial services, and the likes. PMG does fit that mold nicely.

BT? If you just step back a little bit, seven years ago, we set a strategy for the enterprise that was focused on a few pillars.

One was people and culture, and we think PMG is a great cultural fit with super talented people, so we are excited about that. It was to strengthen North American Pharmaceutical distribution, and it was to modernize or continue to modernize our portfolio through disciplined capital allocation. Then to focus on two growth areas, oncology and biopharma services, where we felt like we had differentiated assets, we had end markets that had good growth that we could foresee into the future. Over the last years, we have been executing on that strategy.

We think Precision Medicine Group fits both the focus on oncology through their clinical assets, which complement Sarah Cannon Research Institute, Ontada, the US Oncology Network, and help extend our reach into clinical research with a particular focus on oncology. Then on the commercial side of their business, it supports our biopharma strategy, adding us depth in things like market access and payer insights and consulting that we think we can then leverage to have a more complete commercial solution for payers. So we are really, really pleased with just the people, the talent, and the strategic fit.

I probably wouldn't use the word conservatism. I would use the word confident. We're extremely confident around the momentum in our business, given the fact it's broad based. You are correct, we did increase the guidance tied to North American Pharmaceutical. You may remember our original guide was 5.5%-9.5% AOP growth for the year. Given the momentum we're seeing across the business from a customer standpoint, a product standpoint, we're seeing good growth from health system with specialty. For us, that gave us the confidence to raise. That was the $0.40, give or take. Your question was around O&M and RxTS. How do we feel about those two businesses as well? For O&M, Oncology & Multispecialty, we're off to a great start of the year.