McKesson (NYSE: MCK) reported Q4 EPS of $3.69, $0.03 better than the analyst estimate of $3.66. Revenue for the quarter came in at $52.4 billion versus the consensus estimate of $53.15 billion.

• Fourth-quarter fiscal 2019 revenues of $52.4 billion and full-year fiscal 2019 revenues of $214.3 billion, a full-year increase of 3%.
• Fourth-quarter GAAP loss per diluted share from continuing operations of $(4.17) and full-year GAAP earnings per diluted share from continuing operations of $0.17.
• Fourth-quarter Adjusted Earnings per diluted share of $3.69, up 6% from a year ago. Full-year Adjusted Earnings per diluted share of $13.57, up 8% from a year ago.
• Fiscal 2019 cash flow from operations of $4.0 billion and free cash flow of $3.5 billion. McKesson returned $1.9 billion to shareholders through share repurchases and dividends in fiscal 2019.
• Fiscal 2020 Financial Outlook: Adjusted Earnings of $13.85 to $14.45 per diluted share.
• Renewed pharmaceutical distribution relationship with CVS Health through June 2023.
• Cost Savings Target Update: Increased previously announced anticipated annual savings by $100 million to approximately $400 million to $500 million by end of fiscal 2021.

“McKesson delivered solid adjusted operating results, and we are pleased to conclude fiscal 2019 with adjusted EPS growth of 8%,” said Brian Tyler, chief executive officer. “We successfully executed in a challenging environment and took action to address the headwinds in our European business. McKesson exits fiscal 2019 with improving momentum across many of our businesses. Our financial flexibility, reinforced by a strong balance sheet and solid cash flow generation, positions us to continue delivering shareholder value.”

“We are making important progress towards our initiatives and are confident that the actions we are taking position us for growth in fiscal 2020 and beyond,” Tyler concluded.

GUIDANCE:

McKesson sees FY2020 EPS of $13.85-$14.45, versus the consensus of $14.15.

• McKesson to deliver low- to mid-single digit percent revenue growth and flat to low-single digit percent adjusted income from operations decline in fiscal 2020.
• U.S. Pharmaceutical and Specialty Solutions to deliver low- to mid-single digit percent revenue and adjusted operating profit growth in fiscal 2020.
• European Pharmaceutical Solutions to deliver low- to mid-single digit percent revenue and adjusted operating profit growth in fiscal 2020.
• Medical-Surgical Solutions to deliver high-single digit percent revenue growth and high-single to low double-digit percent adjusted operating profit growth in fiscal 2020.
• Other to deliver approximately flat to low-single digit percent revenue decline and adjusted operating profit is expected to decline low- to mid-single digit percent in fiscal 2020, which assumes the company’s continued 70% equity interest in Change Healthcare through March 31, 2020.
• Adjusted corporate expenses to be between approximately $725 million and $775 million, primarily driven by an anticipated increase in opioid-related litigation costs, and investments in technology-related infrastructure and growth-oriented data and analytics capabilities.
• Interest expense to be between $245 million and $265 million.
• The guidance range assumes a full-year adjusted tax rate of approximately 18-19%, which may vary from quarter to quarter.
• Foreign currency exchange rate movements to have a net neutral impact to adjusted earnings per diluted share year over year.
• Free cash flow to be $2.8 billion to $3.0 billion, which is net of expected payments for property, plant and equipment and capitalized software expenditures of between $500 million and $700 million.
• Weighted average diluted shares used in the calculation of earnings per share to be approximately 185 million for the year.

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