Q4 2020 Earnings Call
This time I'd like to try to call lever to Hollywood <unk>. Please go ahead.
Thank you wish on a good morning, and welcome everyone to Mckesson's fourth quarter fiscal 2020 earnings call.
Today I'm joined by Brian Tyler, Our Chief Executive Officer, and that allows our Chief Financial Officer, Brian will lead off followed by Brent and then we'll move to a question and answer session. Today's discussion will include forward looking statements such a 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 factor 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 statement.
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 Dot Mckesson Dotcom with that let me turn it over to Brian.
Thank you Holly and good morning, everybody I'm appreciate you being with us on the call today.
Yeah, Hi, sincerely hope that you and your families and your communities are staying healthy and safe as we navigate through these really extraordinary times.
Today, we reported a strong finish to our fiscal 2020 with the trends we saw in the fourth quarter prior to the covert 19 pandemic, reflecting a continuation of the momentum we experienced coming into that really throughout our fiscal year.
Round Mckesson's 187 year history, we've demonstrated time and time again.
Our ability to adapt and swiftly respond to the evolving needs of our customers, particularly in trying times and the resiliency in the long term strengths of our business model.
Today, My remarks will echo similar themes I want to walk you through Mckesson's response to the covert 19 pandemic and the essential role we play in health care supply chain.
The progress we've made this year against our strategic priorities and RF why 20 results, including the impact covert 19 had on our fiscal fourth quarter.
I also want to talk about why I'm confident that mckesson remains well positioned.
Now and especially over the longer term.
Sure I began a I want to acknowledge and really sincerely. Thank all of those are working so tirelessly to keep us healthy unsafe during this crisis, including our customers at all frontline health care professionals nurses physicians first responders literally around the world.
Thank you to each and every one of our 80000 Mckesson associates for their passion, they're energy in many cases courage. These past several months working around the clock to maintain mckesson's operations and support our customers and frontline caregivers during these challenging times.
I want to particularly recognize our colleagues who are on our frontline's like those in our distribution centers in our pharmacies in Canada, and Europe supporting community practices, and our transportation professionals your commitment to making it happen going the extra mile for our customers and rallying.
Around one another in these times.
It's well, it's just what makes mckesson's culture. So special it makes me incredibly proud to be part of team Mckesson.
As one of the largest health care companies in the World, We have and we will continue to play and essential role in addressing the covert 19 pandemic.
Our response has been guided by the key principles of protecting health and safety.
For the health care supply chain for our customers and far employees and the in and the communities in which we all live.
Early on we enacted our business continuity and disaster recovery plans across the organization in order to maintain high functioning operations around the globe.
We assembled a critical care drug task force comprised of our sourcing specialists and individuals with clinical backgrounds in health systems pharmacy to review guidelines and protocols and the forecast changing pharmaceutical and medical product demand.
This task force in conjunction with guidance from our government partners is working to predict allocate and extend supply availability to serve the rapidly changing needs of our customers.
In addition.
Our claris one in our global sourcing teams in London are working closely with manufacturers to understand their plans and to create new capacity or scale up production. So that we can be prepared to swiftly react as the supply chain in the coming weeks.
On an years ahead.
Mckesson is partnering with government agencies at the federal state and local level, along with other industry leaders to creatively solve for the most complex and pressing issues. This crisis presents.
As demand surge is for personal protective equipment or PE Mckesson is doing everything within our power to identify new sources manufactures and markets for these critically needed products.
We're very proud of our partnership with Walmart to produce and deliver medical gallons to the U.S.
Our two companies have collaborated in an entirely new way by bringing expert teams together and moving with remarkable speed, which has led to 2 million additional medical gallons in our country supply to date and we expect roughly 10 million will be added by the end of June.
In Europe in Canada, our retail pharmacies have remained open providing the essential community based care that our customers rely on.
We implemented several changes in our retail pharmacies to ensure our customers feel comfortable and safe, including limiting the number of customers in stores installing protective shielded pharmacy counters, dedicating shopping times for seniors and for first responders and regularly disinfecting all high touch areas.
We're also expanding our pharmacy services to include virtual health offerings home delivery in certain markets and increased online pharmacy capabilities.
We've undertaken multiple measures to protect and promote the wellbeing of our employees.
These include comprehensive sanitation protocols for our distribution centers and office facilities work from home technology for our office based employees enhance medical benefits, including telemedicine and wellness offerings and emergency paid sick leave.
Some of our very first actions.
We are recognized the stress that this situation would put on our frontline workers in our communities. So we made special payments to reward the hard work of our associates on the front line and to bring some comfort and sense of calm to their families. We increased funding to our take care of our own fund.
To help with expenses, such as childcare groceries housing and utilities.
And we increased our foundation funding to support our communities in their time of great need.
Including donations to support local local phone food banks and communities, where mckesson distribution centers are located around the U.S.
Our approach to address the pandemic underscores our value system and how we carry out our vision to improve care in every setting one product one partner one patient at a time.
Turning now to our financial performance.
We're going to review our fiscal 2020 results our fiscal 2021 outlook and why we're so confident in mckesson's long term future. Despite the near term uncertainties that are really facing everyone.
In fiscal 2020, Mckesson delivered strong revenue and adjusted operating profit growth across the business.
Our fiscal 20 adjusted earnings per diluted share result of 14, 95, which was up 10% versus the prior year reflects continuing momentum and transformation within our business.
Coming into the CEO role a little over a year ago I focus the organization around three strategic priorities, which I shared during our analyst meeting in December I'd remind you. These priorities, we're growing our core U.S. pharma business investing in the areas, where we have differentiated capability and growth prospects.
And simplifying the business and better aligning the organization I.
Im extremely pleased with the meaningful progress we made in executing against these strategic priorities in fiscal 20.
And our U.S. pharmas suitable specialty in solutions segment, we finished the year with the highest level of adjusted operating profit growth in our last for fiscal years and we again this year successfully renewed large customers, while being disciplined in our approach to the market.
Most recently, having been selected by the VA to continue to serve as their prime pharmaceutical vendor.
We believe our strong value proposition and superior customer service quality, our foundational to this success.
Our cost and working capital efficiencies underpin this growth and further fuel this strategic investments, we're making in the business.
We view our investments in data and analytics as investments in foundational capability, leveraging our scale to deliver greater value for our customers.
We're also making investments into areas, where we believe we have differentiated capability and opportunity for growth.
In alignment with our strategic growth initiatives, we're expanding our manufacturer value proposition to drive more innovation better patient outcomes and additional uptake for our manufacturer partners were harnessing our decades of experience in patient access and adherence programs and combining it with the connectivity and reach of Covermymeds within our.
Our next Ts business to deliver new capabilities.
Accelerated speed.
And we continue to prioritize specialty as a key area of future growth that investment.
We have been building and investing in our portfolio of differentiated specialty assets for more than a decade, which gives us great expertise in areas like oncology.
Our third strategic priority centered around simplifying the business and aligning the organization.
We are becoming a more focused more on lined and more agile company.
A foundation that served us well during our cobot 19 pandemic response.
In fiscal 2000, we transformed our operating model through initiatives like our spend smart program and centralizing functional services across North America and in Europe.
Evidence of our success and rationalizing costs and streamlining back office functions is also reflected in our positive European segment fiscal 2000 results.
Our Canadian business successfully streamline its organization structure to better serve our retail and wholesale operations customers.
This strategic change combined with the continued execution of actions taken in the prior year translated into good profit growth for the Canadian business. This year. We also invested a significant amount of time in our culture culture transformation and leveraged our corporate headquarters relocation to Texas to strengthen our management team.
[music].
Five new members have joined my management team this year and I could not be more pleased with how quickly the team has united together to execute our strategic and cultural priorities.
One of the most visible accomplishments, we made in fiscal 2000 towards simplifying the business.
It was the completion of our exit of change healthcare.
This is a significant milestone in our company's history that was nearly four years into making.
And we're pleased to deliver on our commitment to create shareholder value through a tax efficient exit.
Let me turn now to the trends that we're currently seeing on our business and how we're planning ahead for fiscal 2021 in light of these near term macro uncertainties.
I will discuss these trends really in kind of more real real time granularity than we typically would and then Brett will further elaborate on my comments.
We really want to help you understand how the rapidly evolving environment impacted not just RF why 20 results, but also RF why 21 outlook.
I will start in the U.S. and and specialty solutions segment, we saw increased demand in pharmaceutical sales during the month of more during the month of March as consumers prepared for an extended stay at home.
In turn pharmaceutical sales declined below pre pandemic levels in April coinciding with the start of our fiscal year.
More pronounced was the decline in specialty provider volumes, primarily in the non oncology markets.
And oncology as evidenced by U.S. oncology practices. Despite a decline in routine office visits such as consultant follow ups, we are seeing relative signs of stability in oncology volumes as patients remain on their treatment regimens.
In our medical business.
Our alternate site customers are facing significant headwinds with providers and surgery centers seeing sharp declines in office visits due to shelter in place guidelines that have taken effect.
And our technology, our MRM STS business, we're seeing lower prior authorization volumes as a result of provider office closures and relaxed and sometimes extended requirements from payers.
And in Canada, and Europe, our retail pharmacy operations are navigating how to adapt to changing consumer needs as retail traffic is impacted by social distancing guidelines.
While it is still early in the quarter. We're currently seeing positive indicators and encouraging signs across all of our businesses that activities are beginning to pick up in the communities were shelter in place guidelines are being relaxed.
With this is our environmental backdrop, we carefully and thoughtfully construct at our fiscal 2021 outlook based on what we know today.
Our fiscal 2021 outlook of 13 95 to 14 75 of adjusted earnings per diluted share factors in several macro economic and business specific assumptions.
Brett is going to take you through the detailed assumptions of our outlook.
Let me comment on why I remain confident now more than ever in mckesson's future.
We have proven our resiliency and natural ability to lead during times of crisis, such as H. One in one Sars the recession of low eight or nine I think the lessons we've learned in the expertise. We have gained continue to serve us well.
We operate from a position of financial strength.
Our strong balance sheet access to capital markets strong credit ratings provide us great financial flexibility.
Our fiscal 2020 results reinforce the operational momentum, we're generating our business and we have repeatedly demonstrated our willingness and commitment to make the right not always easy, but right decisions to best position the business for long term growth.
Despite the near term challenges, we remain focused on executing against our priorities and investing in our strategic growth initiatives.
Positive energy dedication commitment and togetherness of team Mckesson is unmatched and I do believe our future is bright.
Again, thank you for your time, and let me now I'll turn it over to Brent.
Thank you, Brian and good morning, everyone.
Our fiscal fourth quarter was certainly very different than we were expecting when we last spoke during our third quarter earnings call.
The covert 19 health crisis has impacted the way our employees customers partners and communities we have in work.
We could not be prouder Howard teams across the World responded.
And this new environment, our team supported our employees customers patients in communities.
Demonstrated the resiliency and strength of our business, we solid financial performance during these challenging times.
Let me start by reaffirming that the fundamentals of mckesson's business our solid.
Our strategy is clear and the prospects for the business remain unchanged and promising.
Despite the challenges and uncertainties of the current environment, our businesses continue to play a leading role and health care supply chain.
Our focus execution and financial discipline remain intact.
Today I'll provide you with more granularity than I typically do to help you understand our view on recent trends in our business is performing in this uncertain and rapidly evolving environment.
I have three primary goals for today's call first to provide an update on our fourth quarter in fiscal 2020 results, including the estimated impacts from cobot 19.
Second to provide an overview the recent trends we're seeing.
And third to provide a detailed fiscal 2021 outlook.
Many companies have withdrawn or not provided guidance. However, given the uncertainties in the environment and the wide disparity across analyst models. We felt it was important to provide our assumptions in views on the upcoming fiscal year.
I will address our guidance some more detail later in my prepared remarks, however, I'd like to provide a better framing as relates to fiscal 2021.
The guidance, we are providing today assumes that the first half of fiscal 2021 will be challenging with the most severe impacts from cobot 19 occurring during our fiscal first quarter ending June 30.
We anticipate that we began to see gradual improvement in our fiscal second quarter ending September 30.
With continued improvement in our results over the second half of our fiscal year.
Let me state beginning of this call we expect to business will deliver growth in adjusted income from operations and adjusted earnings per diluted share in the second half of the fiscal year as compared to fiscal 2020, when setting aside the fiscal 2020 contribution from our prior equity stake and change healthcare.
Let's turn now to review of our fiscal 2020 results.
Mckesson posted a solid closed fiscal 2020 with full year adjusted earnings per diluted share $14.95.
This result was 10% above fiscal 2019 and included a return to adjusted operating profit growth in all reportable segments.
Additionally, we are pleased of completed successful exit of our investment to change healthcare during the quarter through tax efficient split off transaction.
Our exit resulted in a pre and post tax gain of $414 million, which impacted our GAAP only results in the quarter.
With the split off complete we're well positioned to move forward with increased focus against our strategic growth initiatives.
Our balance sheet remains solid, which underpins are investment grade credit rating, our financial position provides us the flexibility necessary as we navigate current market uncertainty and future growth opportunities.
On our February for third quarter earnings call I discussed momentum building across the business. This momentum continued to build through mid March.
On March 11 World Health organization declared to covert 19 outbreak a pandemic.
Shortly after our businesses experienced increased demand in consumer behavior patterns began to change the virus continued to spread.
Pharmaceutical distribution volumes in the US Europe in Canada increased as people stocked up on medications and personal protective equipment.
This incremental demand provided a net tailwind to our fourth quarter revenue results.
Want to take a moment provide the estimated impact of cobot 19 on our fiscal fourth quarter consolidated results.
There is approximately $2 billion of incremental revenue.
Salting, primarily from higher customer demand for pharmaceuticals.
We expect to reverse in the first quarter fiscal 2021.
Adjusted gross profit in the quarter was favorably impacted by approximately $65 million.
Offset by approximately $15 million and variable operating expenses as a result, these incremental volumes.
We also had approximately $45 million of onetime adjusted operating expenses in the quarter, including investments in our frontline employees higher expenses to support a remote workforce and charitable contributions to support our communities.
In summary, the impact of Cobot 19 had a nominal effect on our fourth quarter adjusted earnings results as a previously mentioned impacts largely offset.
Transition now to a discussion of our adjusted earnings results for the fourth quarter.
Fourth quarter adjusted earnings per diluted share was $4 in 27 cents up 16% in the quarter compared to the prior year, primarily driven by a lower share count and growth in the European pharmaceutical and us pharmaceutical and specialty solutions businesses offset by higher corporate expenses, which includes the onetime.
I am costs I referenced earlier.
Moving to the details of our consolidated results, which can be found on slide four.
Consolidated revenues for the fourth quarter increased 12% versus the prior period, principally driven by growth in our us pharmaceutical and specialty solutions segment.
As previously mentioned the estimated impacted Kobin 19 was approximately $2 billion of incremental revenue in the quarter.
Moving these incremental sales consolidated revenues increased approximately 8% year over year.
Fourth quarter adjusted gross profit was up 7% year over year led by growth in our medical surgical and us pharmaceutical and specialty solutions segments.
Fourth quarter, adjusted operating expenses increased 8% year over year, driven by increased investments to support future growth in oncology and specialty businesses.
Technology infrastructure and the previously mentioned onetime expenses during the quarter.
These incremental onetime and cobot driven expenses accounted for approximately 3% of the year over year increase.
Adjusted income from operations was $1 billion for the quarter, an increase of 1% as compared to the prior year.
Interest expense was $65 million in the quarter decline of 7% compared to the prior year due to lower commercial paper balances.
Our adjusted tax rate was 17.3% for the quarter, mainly driven by our mix of business and discrete tax benefits.
Wrapping up our consolidated results our fourth quarter diluted weighted average shares were 174 million a decrease of 9% year over year.
Our adjusted earnings results includes a seven cents benefit from our previously mentioned split off of change healthcare, which lowered our shares outstanding by 15.4 million.
Next I'll review, our results, which can be found on slide five through eight.
Starting with us pharmaceutical and specialty solutions segment.
Revenues were $46.3 billion for the quarter up 13%.
Given by branded pharmaceutical price increases in growth from our largest retail national account customers, including incremental volume, resulting from coal would 19.
These were partially offset by branded to generic conversions.
Fourth quarter, adjusted operating profit increased 3% to $772 million driven by continued growth in specialty businesses.
Mostly offset by previously announced investments in oncology and manufacturer services.
Segment adjusted operating profit for the full year increased 6% to $2.7 billion.
In the segment adjusted operating margin for the full year was 146 basis points, a decrease of four basis points.
Next European pharmaceutical solutions revenues were $7.2 billion for the quarter, an increase of 6% year over year on an FX adjusted basis revenues increased 9% driven by growth in the pharmaceutical distribution business, including incremental revenue as a result of Kobin 19.
Fourth quarter, adjusted operating profit increased 226% to $75 million on an FX adjusted basis adjusted operating profit increased 239% driven in part by lower operating expenses as a result of actions previously taken to rationalize our store footprint and streamline back office functions.
And the lapping of a prior inventory charge of approximately $20 million.
Segment adjusted operating profit for the full year increased 5% to $231 million driven primarily by expense rationalization and the previously mentioned prior year item.
Segment adjusted operating margin for the full year was 84 basis points and increase the four basis points.
Moving now to medical surgical solutions.
Revenues were $2.2 billion for the quarter up 13% driven by organic growth led by our primary care business, including higher pharmaceutical and flu test kit volumes.
Segment, adjusted operating profit for the quarter was down 1% to $170 million.
Given primarily by higher expenses in the quarter, which included a provision for bad debt and our primary care business, partially offset by organic growth principally in our primary care business.
Segment adjusted operating profit for the full year increased 12% to 670 million $79 million driven by organic growth and the segment adjusted operating margin for the full year was 818 basis points, an increase of 24 basis points.
Finishing our business review with other revenues were $2.9 billion for the quarter up 3% on an FX adjusted basis revenues were up 4% driven primarily by growth in the Canadian Nm Rx Gx businesses.
Adjusted operating profit was $242 million for the quarter down 6% on both reported and FX adjusted basis, driven primarily by a lower equity contribution from the company's investment to change healthcare, partially offset by organic growth in the M. Rx Ts business.
Other adjusted operating profit for the full year was down 4% to $953 million driven by the lapping of a $90 million contractual liability reversal related to our investment and change healthcare in the prior year, partially offset by higher volumes interim Rx Ts businesses.
Included in other adjusted equity income from change healthcare was $253 million for the full year.
As a reminder, mckesson will no longer record adjusted equity income for change healthcare beginning in fiscal 2021 as a result of the split off.
Moving to corporate Mckesson recorded $224 million, an adjusted corporate expenses in the quarter, an increase of 25% year over year, driven primarily by the previously mentioned onetime expenses and higher opioid related legal fees.
These onetime expenses accounted for approximately 8% of the year over year increase.
For the full year adjusted corporate expenses were $685 million, an increase of 23% compared to the prior year.
Year over year increase was result of planned increases in technology related investments and an increase of $36 billion, an opioid related litigation costs to $150 million for fiscal 2020.
Turning now to cash which can be found on slide 10.
For the fiscal year, we generated $3.9 billion in free cash flow.
This includes $506 million spent on capital expenditures.
Fiscal 2020 represented another solid year of cash flow generation, resulting from our continued focus on working capital efficiency positive timing impacts in cobot 19.
Similar to fiscal 2019, a portion of the fiscal 2020 result was due to favorable timing in our us distribution in European businesses.
We also benefited from the previously mentioned demand pull forward in response to the Cobot 19, pandemic, which coincided with the end of our fiscal year.
We estimate a cobot 19 related benefit of approximately $550 million, which is expected to reverse in the first quarter fiscal 2021.
We ended the quarter with a cash balance of $4 billion after paying down approximately $2.4 billion of debt in fourth quarter net of issuances, which included repayment of $2.1 billion about standing commercial paper.
And in fiscal 2020, we returned $2.2 billion to our shareholders via share repurchases and dividends.
Wrapping up fiscal 2020 results.
Our performance in the fourth quarter highlights the resiliency of our business model and the strength of our financial position.
Fiscal 2020 marked a return to adjusted operating profit growth across every business, reflecting improved fundamentals and solid execution.
Despite recent macroeconomic headwinds the company is in solid and stable financial position.
With that let me turn to our fiscal 2021 outlook.
As I mentioned in my opening remarks, we believe it is important to provide our views of the environment insight into the trends, we're seeing across our businesses and to provide an outlook for fiscal 2021.
We believe its constructive to provide you with our view of the business, including our perspective on the economic uncertainties surrounding the potential impact and duration the Covre 19 pandemic.
We take a long term approach to our businesses and although the covert 19 pandemic presents a near term headwinds we believe this to be temporary.
Underlying fundamentals of our business remained stable and on solid footing as evidenced by our Q4 and full year results for fiscal 2020.
I'll start by providing a brief overview of the environment, we are operating with that.
After the initial volume spikes following the March 11th World Health organization Declaration volumes began to trend lower across our businesses.
In April the landscape continued to evolve quick and state provincial and local governments issued shelter in place orders.
As a result physician offices in surgery center sites began to close temporarily meaning fewer patients going to see their doctors and delays in elective procedures.
Throughout April average weekly volumes in our medical and specialty provider business trailed off up to 50% of pre cobot 19 levels oncology visits declined while volumes and our pharmaceutical distribution in retail businesses experienced greater levels of volatility as customers adjusted to the environment and government orders and.
Recommendations.
From the onset of the pandemic in the U.S. elective therapies showed a sharp decline through April, especially within ophthalmology were declines were nearly 30% versus calendar 2019.
In the first couple of weeks of May we've seen volumes begin to stabilize and modestly improve in our pharmaceutical in retail businesses.
Volumes in our medical and specialty provider businesses have also began to stabilize although well below previous pre covance levels.
To this point the relative shape of the curve is in line with our expectations in confirms our view on the progression recovery over the course of fiscal 2021.
I will note that the guidance we are providing today is based on what we know at this time and I want to be clear that one certainty is it events will occur in the coming days weeks and months that will cause these underlying assumptions to change from what we present to you today.
Next I'll provide some framing on a couple of key macro level economic assumptions.
We're not assuming that a second wave the virus returns leading to sheltered home scenarios precluding patient consumption of healthcare services supplies in pharmaceutical products.
We're not assuming any systemic customer insolvency events.
We do assume that unemployment peaks in our fiscal first quarter and gradually begins to improve across the remaining quarters of our fiscal year.
We do assume that position in oncology office visits and pharmacy interactions will begin to gradually resuming our fiscal second quarter and continue to improve in the back half of our fiscal year.
Our view of the environment in particular, our largest markets us assumes that the impact in particular to our medical specialty provider and oncology businesses is more significant in severe in the first quarter and that the shape of the recovery gradually improves each quarter with a return to more normal volumes in our fiscal fourth quarter.
We those underlying assumptions and mine, let me turn into our fiscal 2021 guidance.
We expect adjusted earnings per diluted share to be in the range of $13 in 95 cents to $14.75, which is notably wider than past guided ranges given the economic uncertainty inherent in our previously mentioned assumptions.
As I discussed in my opening remarks, we anticipate a positive progression of earnings over the course of fiscal 2021.
We expect Q1 to be sharply down on a year over year and sequential basis.
We see modest recovery begins in our fiscal second quarter net this recovery progresses into the back half of the fiscal year with the business returning to adjusted income from operations and adjusted earnings per diluted share growth in the second half of the fiscal year.
For a full list of fiscal 2021 assumptions. Please refer to slides 12 to 14 in our supplemental slide presentation.
Rather than outlining each assumption on said walk you through the key items, starting with the segments.
In the U.S pharmaceutical and specialty solutions segment, we expect 3% to 6% revenue growth, which considers current headwinds in our practice management and provider solutions businesses as a result of office closures and delays in elective procedures.
Adjusted operating profit is expected to be flat to 4% down as compared to the prior year as a result of the previously mentioned headwinds in our specialty businesses.
We expected to second half adjusted operating profit results will reflect flat to 3% growth.
In line with our previously outlined recovery assumptions.
In the U.S market, we anticipate mid single digit branded pharmaceutical price increases.
Largely consistent with our experience in fiscal 2020.
As a reminder, approximately 95% of our contracted branded manufacturers are on a fixed fee for service rate basis.
Moving to the European Solutions segment, we expect revenues to be flat to a 5% decline as compared to the prior year.
Adjusted operating profit is also expected to decline between approximately 20%, 25% driven by anticipated impacted the cobot 19 pandemic on customer behavior patterns over the first half of the fiscal year.
We expect that the second half adjusted operating profit results will be flat to 2% growth as compared to the prior year weve variability by country as each market opens and begins to return to normal.
Transitioning now to medical surgical.
As we've discussed previously we have a dynamic and broad portfolio in medical surgical approximately 60% of our medical surgical business supports primary care sites physician offices ambulatory surgery centers and reference lab locations. These sites of care have been impacted more significantly as office visits and elect.
Your procedures have been canceled or deferred.
In constructing our outlook for the medical surgical segment, we developed several potential outcomes to inform the range from the low end to the high end of our estimates.
We projected it could take a few quarters for patients to get comfortable returning to physician office sites and was scheduling and elective procedure.
But we do believe this demand will return.
Over the past few weeks, we've seen our medical surgical business begin to stabilize and we've seen modest improvements in volumes, we expect to recovery in demand to continue to our fiscal second quarter with further improvements in the second half of our fiscal year.
Therefore, we expect a 3% to 8% revenue decline, primarily driven by softened demand in first half of fiscal year.
As a result of these macro level headwinds, we also expected 10% to 20% adjusted operating profit declined for the full year.
As demand continues to improve we expect that the second half adjusted operating profit results will grow 5% to 15% as compared to the prior year.
For the remaining businesses included in other revenue is expected to decline approximately 7% to 12% driven by expected lower foot traffic and retail stores across Canada in the short term and lower prior authorization volumes as a reminder, fiscal 2000 results include our investment change healthcare.
Which included $253 million and adjusted equity income in fiscal 2020.
Excluding the change healthcare results in the prior year for comparison purposes.
We expect that adjusted operating profit within other will be flat to down 5% for the full year, but is expected to increase greater than 10% in the second half of the fiscal year.
As the businesses within other returned to normal volumes.
Now, let me turn to the consolidated view.
We expect 2% to 4% revenue growth in adjusted income from operations is anticipated to be 10% to 15% decline as compared to the prior year.
Excluding the results of change healthcare from fiscal 2020, we expected adjusted income from operations will decline, 5% to 8% for the full year, but we'll grow 6% to 10% in second half of the fiscal year on a year over year basis in line with their stated economic recovery assumptions.
We expect corporate expenses to be approximately flat compared to prior year and this assumption reflects opioid related litigation costs to also be roughly flat year over year.
We remain focused on our cost savings programs, our annual pretax gross cost savings target remains approximately $4 million to $500 million, which we are on track to substantially realized for the end of fiscal 2021.
Additionally, we have implemented mitigation efforts in light of the headwinds presented by the Cobot 19 pandemic, including an effort to continue to reduce controllable spanned across all categories.
Moving below the line, we expect interest expense in the range of $230 million to $250 million, we expect income attributable to non controlling interest in the range of 200 $220 million.
We assume a full year adjusted tax rate of approximately 18% to 20%, which may vary from quarter to quarter and includes anticipated discrete tax items that we expect to realized during the course of the year.
We anticipate the impact of foreign currency exchange rate movements to be a net unfavorable impact of approximately five cents.
And we expect weighted average diluted shares outstanding for fiscal 2021 to be in the range of approximately 161 to 163 million.
Let me wrap up our fiscal 2021 outlook with a few comments on cash flow in capital deployment.
We expect free cash flow of approximately $2.3 billion to $2.7 billion, which is net of property acquisitions and capitalized software expenses.
And includes the pull forward impacts of Cobot 19 previously discussed.
We will use our cash flow to continue to invest internally in our strategic priorities of oncology and manufacturer services.
We anticipate property acquisitions and capitalized software expenses to be in the range of $400 million to $550 million.
At Mckesson capital deployment starts for their continued ability to generate healthy operating cash flow.
We will continue a disciplined and balanced approach to capital deployment.
Our priorities remain clear and consistent.
Our demonstrated history of solid cash flow generation provides us flexibility in our capital allocation program.
First we prioritize growth investments in our strategic assets as an example in Q4, we continued to invest into aren't our oncology and manufacturer services assets and capabilities to extend our differentiated and leading positions.
Fiscal 2021, we will continue to invest in our strategic initiatives to drive further differentiation and position our businesses for long term growth.
The current environment does not impact or desire to invest in M&A opportunities that are on strategy at multiples that offer superior returns on capital and accelerate future growth and cash flow generation.
We also remain committed to returning capital to our shareholders through a modest year growing dividend and share buybacks and I would remind you that we currently have $1.5 billion remaining on our share repurchase authorization.
We've maintained our investment grade credit rating, which underpins our financial flexibility and our ability to access long term debt and commercial paper markets.
We also have access to $4 billion through our revolving credit facility, which has not been drawn upon.
At this time, we have no immediate need to access the long term debt market nor draw upon our revolver to meet near term liquidity needs.
In closing we are pleased with the results of our fiscal fourth quarter and proud of how we responded to the extraordinary demands brought on by this pandemic.
We remain focused on our employees customers partners and communities.
While the external environment presents many unknowns, our businesses continued to show resilient and stable fundamentals along with consistent execution.
We continue to have a solid balance sheet and healthy cash generation, which underpin our investment grade credit rating and we'll continue to deploy capital to invest in growth areas wind to our strategy aimed at creating balanced returns for our shareholders.
Despite the current macroeconomic headwinds, we remain confident in our business and in our ability to create stability in the supply chain through the strength of our sourcing and distribution operations and with that I'll turn the call over to the operator for your questions in the interest of time I'd ask you to limit yourself to just one question to allow others and operate.
Unity to participate.
Thank you.
I would like to six.
Question. Please press star one touchstone telephone if you're joining us today you may speakerphone. Please make sure IMMU. Instead also allow signal to reach our equipment again that is star one if you'd like to ask questions.
And your first question comes from.
Michael Cherny with.
Bank of America Merrill Lynch.
Good morning, Thank you for all the details.
I wanted just ask a bit of a follow up clarification. Additional question on the pharma EBIT guidance in particular, you talk about 3% growth in the second half the year on adjusted profit basis.
As you think about the ramping should should we assume that you'll be exiting fiscal 21.
The quote unquote normalized run rate and in jumping into fiscal 2002 on what should be the normalized run rate of profit growth for the pharma segment particular.
And Mike Thanks for that question I'll start and let Bryan add onto that.
We're very pleased with our performance in our us pharma and specialty solutions segment in fiscal 20, we finished the year with full year adjusted operating profit of 6%, we had strong revenue growth throughout the year.
And as we talked about we expected the first half of the year, we're going to have some more sharp impacts on our specialty solutions businesses.
Which will impact obviously, the full year operating profit as we talked about we expect that to continue to improve throughout the year.
And as we get to the back half of the year that gradual improvement throughout each quarter will lead us to getting back to growth for the for the second half of the year.
And so I think that as you think about this theres going to be gradual improvement across each quarter.
As we get to the ended the year, we're going to be exiting on a on a growth basis again and feel good about the prospects from that point forward.
Your next question comes from the line of Robert Jones with Goldman Sachs.
Great. Thanks for the questions I guess, maybe just a follow up on that I mean coming into fiscal 2020, you guys had thought the us pharma specialty business grew at 3% to 5%.
Im sure there was a little bit of pull forward in the four cubit generally business performed.
In line to slightly better than that I mean, just just a follow up on your previous answer I mean is the assumption that.
The business kind of gets back to those levels as we get.
Through the year it and in particular into into Fourq, you and then just one housekeeping I know you mentioned, a 45 million a onetime adjusted operating expenses in the fourth quarter.
I was curious if that was included excluded and then what's the assumption for additional co and related costs in 2020 guys. Thanks.
Yes. Thanks for the question, let me just step back to your first question.
Again, as we talked about in our us Farman specialty solutions business, it's a broad business.
Yes, pharma distribution, but also a broad based specialty set of businesses, which includes our multi multi specialty provider businesses, which as we talked about have been more severely impacted.
In April and early May and we expect to have greater impact through the first quarter would just gradual improvement throughout the balance of the year. So as we think about that second half of the year, it's really going to be that continued improvement of not only volumes, but profitability across both of those businesses and we feel comfortable that getting too as you.
At a 3% growth in a balance of the second half again with that gradual improvement sets us up well to returning to that 3% to 5% as we go forward.
We won't recover all of the volumes this year will recover gradually throughout the year, but again I just would point out at our broad based specialty business, which includes our provider business and our practice management business are more impacted and are going to gradually improve over the balance of the year, the $45 million that I reference.
Just earlier on that was across all of our businesses.
It was as Brian mentioned to pay bonuses to frontline workers in each of our businesses as well as donations that we made across communities as well as cost to set up remote work environments again in our corporate environment, but also in our businesses Thats, obviously part of the year over year compare.
And that is included in our F. why 20 Q4 results and that will be included in for comparison purposes.
Enough why 21.
As our actions taken relate.
Early part of March as we assessed the impact this would have on our teams and frankly anticipated impact our communities.
We thought it was it just important part of who we are the company to take those actions.
Obviously as we look to the year coming ahead, there will be some incremental expense to support.
Social distancing workplace reengineering protection of customers and employees and we'll be continues to be committed to make whatever investments we need to to take care of them.
Second question next question will come.
Your next question will come from Eric Coldwell with Robert W. Baird.
Thanks, very much good morning, Thanks for all the details couple of just unrelated questions first one share repurchase you expressed interest in continuing with that program, but.
Weighted average shares outstanding guidance seems a little bit higher than we would have expected given the low share price right. Now I'm. Just curious if you can give us any specificity on what you're thinking about share repos second question unrelated us oncology would be great to give an update on what you're seeing real time with.
Your practice management business and what impact you're getting from Tobey thanks very much.
Thanks, Eric Let me start and take the first one off the table and then turn it over to Brian.
As I mentioned in the fourth quarter through the exit of change healthcare. We retired 15.4 million shares and we've given you a guidance of 161 to 163 million.
Our capital deployment program will include broad based balanced approach as we always have now will include.
M&A as it presents itself on strategy and good returns, but it also include continued to return capital to our shareholders, which could include share repurchases and we do have $1.5 billion remaining on the authorization and we'll continue to use that to return capital as it is appropriate.
Yes, let me, let me maybe take up the U.S. oncology question.
So.
We have worked very closely with our partners in the practices.
To respond to this unprecedented time and.
Its impact at all care providers.
The U.S. oncology outpatient visits have certainly declined as social distancing guidelines of our implemented.
Impact is really vary depending on what what kind of oncology.
Kind of.
To answer your experiencing.
You see and they vary.
Fast moving aggressive cancers patient volumes not fall. It also much in some of the solid tumor cancers, where progression as slow our people are more hesitant to go in and get testing get diagnosis may feel they had some time to delay so we had seen a bit about.
Visit decline, but the revenue decline has been been less than the visit decline which is.
Encouraging to US we've also taken actions to implement things like.
Tele presence, our art virtual consultation services.
And we ramped up that pretty significantly in the last few months. So overall I think I'd say, we feel good about our positioning oncology of all this but all the all of these our specialty there's probably been a little more insulated as as you think about disease thats, probably not not unexpected.
But we continue to work closely with our practices I.
I think about all the ways, we can help fill make patients feel more comfortable to returning to their care.
Your next question will come from the line of Eric Perjure with Nephron research.
Thank you for the details and for your efforts a question on med surge metric on 60% of this gain provider focused was helpful. I imagine there is very different dynamics in the assay versus the physician office could you help us with an understanding of.
What your distribution business here focuses on him taking less on pp any and potential benefits there.
Are there significant pharmaceutical elements there number that you can buy that's relative to the pharmaceutical component of medical and any expectations for vaccines or experience with the vaccines children's program, how is that running and how might you participate in that.
Scenes in the future.
Great. Thanks, Erik appreciate that question.
Medical business does have a significant footprint in primary care, which we include debt ambulatory surgery center in there and.
It in kinds of practices and we serve basically all different kinds of practices from general practitioners Ob Gee, why and even up to special for specialty oriented practices with medical products and so there's been a.
Pretty wide variation in the way specific.
Specialties are focuses of those practices would have responded and as you're well aware we have very broad offering. These today's practices. It is pp any which tends to be up pretty small historically, a very small part of these practices. Obviously in the last month with social distancing and all the changes we have all expenses.
The pp demand is that is up significantly, but we're also and specialty Rx Rx lab equipment.
Reagents, I mean, we're very very broad bit business and what I would say you as as we've seen patient fall volumes decline.
And in Britt reviewed the metrics that we've seen there I mean really all of those various elements have been impacted in as patient begin to return to the practice. We think we'll begin to see those volumes all rebuild.
Over the course of the coming year, it's obviously from a vaccine perspective, it's a little early vaccines are not on market, but I would remind everybody. We have quite an extensive footprint in the distribution of vaccine today, we do distributed vaccines to the medical business to all of our practice area.
We are.
We work with CDC and their vaccine for children's program as a supplier those vaccines many years ago and each one and one hit US we worked with public partners to facilitate a program to manage that vaccine. So we're very engaged with all the various agency that we'll have interest in this.
With our manufacturer partners to make sure we're availing, our insights and our knowledge in our and our capability and I suspect that as vaccines come to market acceptance ramps up laughter look at what is the production how does that production scale up and how fast that but we would act we would expect to be very engaged in those discussions.
Your next question comes from the line of Lisa Gill with JP Morgan.
Hi, Thanks, very much and good morning.
Can you give us an update on where you are insofar as an opioid potential settlement I know, we talked about that framework, which with several months ago sitting here today, I would anticipate that Steve being in a difficult financial position maybe.
More likely to want to move forward. So if you could just give us any update there thatd be helpful.
Sure lease up I'd be happy too I mean, probably goes without saying that our.
Primary focus the last weeks and months has been on responding to covert 19.
Supporting our communities are at our customers in that response and I'm sure. The same has been true for a lot of the public officials that had been involved I guess on the other side of this opioids issue I really don't think Theres a lot to add to the commentary we provided last time in terms of the specifics of.
This settlement discussions I mean, we continue to be engaged we continue to be hopeful that abroad resolution can be achieved.
We do think that one of the drivers has always been for us the recognition that people and communities have needs and it would be great to get the resolution for them and those needs are probably greater now than ever.
Your next question comes from the line of Brian Tanquilut with Jefferies.
Hey, Good morning, guys Bryner Britt me as I think about the guidance and.
Appreciate the color your dividend.
Is there any assumptions, but as we stared down a recession heading into 2021 mean baking experience being with a company during the last recession. How are you thinking about the likely decline in initial office visits and how your business will be resilient through that.
Great Great question we've.
Our business has been through many economic cycles over its history.
Fortunately Britain IR here for all of them, but we were air for that Oh, eight or nine on and what I would what I would say in general as I think our business model is pretty resilient too and he can and economic recession.
I think if you look back over history, you see that to be the case I will say this situation is a little bit different though because it's it's an economic recession, but it's really driven by an underlying health pandemic.
And so in my mind, the way the business will respond as a little bit more about how we respond to the health pandemic and quote unquote recession.
The faster patients get comfortable being out of their homes the faster they get comfortable going into health care setting.
The faster social policy testing tracing all the things we're talking about in the business and.
And the public media that these come into place that confidence resumes I think thats really whats going to tilt the trajectory and so for me it's much more about how healthcare demand comes back and the general economic climate I mean, there's always puts and takes with.
Ill or you are you uninsured with no coverage do you go to Medicaid, but those are we tend to be a little more insulated from that so I think it's really all about how how quickly confidence comes back and patient.
Assuming healthcare services.
I might just just add that did our guidance really assumes that healthcare demand will return we've seen that in prior recessions like this in our guidance really assumes that it's a gradual build over the course of the year, we're already seeing some as I mentioned, we're seeing some evidence of modest increases.
In may and its early obviously, but we do expect that healthcare demand will return and we do expect that we'll be well positioned for that in really in all the different settings that we participated.
Your next question comes from the line of Stephen Baxter with Wolfe Research.
Hey, Thanks for the question have you all are doing well, it's a bit of a follow up on the prior question about the economy in a more normalized recession I was hoping you could spend a little upon talking about how we should think about the financial healthier customers and how you can see the business being impacted by that in the coming month in years.
Example, there headlines in the news today, where even large and well funded business because they're seeking relief from landlords I guess, what if anything are your customers asking a view at this stage any insight into your conversations with your customers be helpful. Thanks.
Thanks for that question, it's a really good question and we've been working with our customers since the pandemic really started and particularly those customers who have had to shut their doors on a temporary basis.
We did record a small incremental reserve in our medical business in the fourth quarter and I called that out is really more mechanical adjustment.
We've been working very closely to try to understand.
Then there when these customers would reopened what the demand is in each of their businesses and to this point in our customers have either been able to.
Go out and get loans or access public funds that are available or worked very closely with us and we've been able to to help them in really understand with their situation as so we've not really seen a degradation and credit quality to this point.
We will continue to work very closely with those relationships.
At this point I think our customers are very resilient as well and we're very close in working with them to keep them.
As as credit resilient as possible and based on the.
The way we've described our expectation for volume to come back gradually over the course of the year and based on what we see now.
You did call out that we built into our assumptions is that there is no major insolvency event now our assumptions play out correctly believe based on our conversations of what we're seeing now that will continue to be true.
So risk will monitor very closely over the course of the year.
Your next question comes from the line of Steven Valiquette.
Okay.
Great. Thanks, Good morning, Brian and bread hope everyone is staying safe. So I just have to interrelated questions on the European business first I guess I'm curious, how the German JV transaction with Walgreens impacts the acquired 21 guidance for the European segment.
Jeremy generally included or excluded from the European Guide.
And then second I guess.
Whether Germany's in there and Matt I guess, what really sticks out to me is that the magnitude of the expected decline in operating profit in Europe.
Minus 20 to minus 25% relative to the revenue guide zero to minus five six out a little bit, suggesting some notable negative operating leverage in Europe versus some of the other segments any color on the dynamics here would help as well thanks.
Generally.
So start with the German JV I don't think this will be immaterial to our fiscal 2020 want our fiscal 2021.
It is and competition review right now.
Well, we think it's continuing to Pratt.
Congrats on the timelines we expected to.
So not really a lot to add to that as it relates to the fiscal 2021 impact on Europe.
Obviously, we're dealing with 13 countries that are going to have third at had 13 different kind of degrees of.
Challenge and reaction with associated social policy to that challenge and so when we look at an aggregate level, it's going to depend a little bit on how these countries reopen and what their response will be I will say that in the UK, our largest country in Europe I mean, they have.
I've been one of the more severely impacted and have had some of the more severe social restriction implied and thats, what you're seeing really flow through our numbers, maybe if I would just just add on our German business as we've talked about previously is relatively immaterial to the overall in the European results.
It is included the we did include Germany in RF, why 21 plan, but again, it's relatively immaterial.
I would just point to the fact that our second half European results in F. Why 20 were quite good and we exited the year.
Pretty strong performance and as we think about fight 21 really gets back to what we've talked about with many of our other businesses.
There is a.
Temporary shock that is more severe in the first half of the year and as Brian mentioned mix matters, a lot how to countries open one by one to open a different rates in different times and in that mix is really what you're seeing flow through our business and our 21 outlook.
Your next question comes from the line of Ricky Goldwasser with Morgan Stanley.
Yes, Hi, good morning, My question is focused on generic pricing.
We are hearing how meaningful train India.
Historical levels from cost.
I've seen some step up to what are you seeing.
Fine informing how are you chemo.
We turned cancellation fiscal year 21.
And then also allowed lydall manufacturing.
Yes.
Good some funding to manufacturing tracks.
Do you.
Any thoughts.
We will see.
Can you manufacturing coming back.
Aim what role to play in that type of scenario.
Thanks, Ricky for that question, let me start with your first question and then I, Brian take it from there from a generic perspective, we continue to have a very strong sourcing organization, which is really benefited us well as we've gone through this period the relationships that we have with manufacturers our ability to.
Continue to to secure supply in a very stable and consistent manner is played well for us.
On the on the sell side, we continue to see relatively stable environment.
And so there is competition, but pricing is continue to be stable and competitive. So that's allowed us to continue to earn spread on our generic products.
And I think it really it starts with our ability to secure that supply and consistent manner and claros, one spend able to do that.
Very well over the last several years honestly, we expect that to continue enough why 21.
Yes, I think from an overall perspective, I mean, it's been pretty.
Pretty good performance industry wide in terms of supply availability and.
Obviously, we.
Began monitoring this very closely I mentioned, we set up our critical care task force.
And ER.
Really at the very end of our fiscal 20 continue to monitor this.
Frankly have yet get very detailed updates every week on that.
So I think generally we still feel okay. I would say we've seen anything I would describe the material change in pricing our ability to supply of things of that nature.
Last question about.
It's very early I think there will be a lot of good questions asked a lot of good work done we do think anything that diversifies availability of supplies creates kind of.
Insurance mechanism. If you will we are supportive of that we also have to recognize their trade offs in that I mean, there are cost trade offs and figure out how that cost gets funded.
Thats working capital or cash cost of the product will have to navigate ourselves through but we're involved in many of these conversations but I'd characterize the mall is very early stage right now.
Your next question comes from the line of Kevin Kelly Endo would you be yes.
Hi, Thanks for taking my call I really wanted to delve into the cost side a little girl.
Understanding that there's an ongoing larger cost savings plan, but going through the businesses. If you would talk about how much variable spending you have you you you have in each and really what the plan is.
Just thinking in looking at the margins and backing into sort of what you're saying the margins versus the revenues definitely look like and I'm just trying to gauge how much variable spending you might be taking out of the business or not.
Yeah. Thanks for that questions you know certainly each of our businesses.
Right.
And a little bit differently position in terms of fixed versus variable costs and and the challenge that we're having in our first half of your in particular isn't the revenue declines are quite sharp.
And so was that kind of revenue declines really putting pressure on the overall cost position I did talk about the fact that we've implemented mitigation.
Plans in cross all of our businesses and across all of our different cost categories and this is an extension of what we're already working on with our cost savings program. So we're certainly making great progress on that we do have some things in our and our structure that will remain the same year over year in our in our material like the opioids little.
Nation related costs, which we expect to continue to be a $150 million, but generally speaking our variable costs will adjust with the volumes that were seeing but because some of our businesses have more significant in severe declines in volumes over the first half of the year there will be some de leveraging that occurs in our businesses.
Over that period as the year goes on cost savings initiatives that we put in place not only our cost savings program with these mitigation activities will generally start to benefit our businesses and lead to that growth that we're seeing over the second half of the year.
Your next question comes on line of Glen Santangelo with Guggenheim.
Hi, Thanks for taking my call I just wanted to follow up on this negative operating profit leverage question I mean I appreciate all the details, but maybe break can you unpack the guidance a little bit at the gross margin line, particularly as it relates to things like mix in drug pricing in contract renewals because when I think all those are probably try and I'm just.
Stand as maybe how much of the operating profit contraction, maybe the result of a weaker gross margin versus you know.
Lower revenues are incremental expenses related to something like told me that that'll maybe help us better assess how much of the incremental expenses may be one time versus ongoing thanks.
Yes. Thanks for that question I again, what I would come back to hear is and I tried to give you a little bit more detail into where we're seeing the impacts on our business and in particular, if you just talk about our medical business as for a moment, you'll that medical business has a in adjusted operating profit Mark a rate of over 800 basis.
Points that is one of the most severely impacted of our businesses.
And we tried to give you a little bit more detail in the sense that our primary care business, where we have lots of capabilities and services that we provide there about 60% of that medical business is primary care sites, which had been the most severely impacted so.
What I would say is it's not necessarily a cost issue and we do have additional cost for protecting our employees and sanitation and cleaning in our distribution facilities. This is more a first half mix issue, particularly in our specialty provider businesses and our medical business, which as you know has a higher adjusted.
At operating profit rate.
Operator, we have time for one more question.
Certainly that question will come from Giorgio with Deutsche Bank.
Hey, good morning, guys and thanks for taking my question I thought Glenn had just kind of stolen that but I'll dive in on the U.S. margin guide one more time, you guys called out in Q4, the branded generic conversions, which we normally think up as a tailwind to margins.
Well were positive impacts I guess as we look at the 2021 margin guidance in the drugs segment could you kind of rank order, what's driving the margin erosion. When we think of either customer mix product mix. The renewal verticals that kind of just kind of length kind of rank ordering the negative margin that's drivers. Thanks.
Yeah. Thanks for that question again, I would come back to what we're seeing is within our business our specialties provider businesses are most impacted.
So thats certainly having a big impact in the first half of the year, we called out very similar types of mid single digit branded price increase rates that we've seen over the past couple of years, that's really not an impact renewals are not an impact we talked about weve been able to renew our three of our largest customers without any impact to our to our.
Guide so I've just get back to as you think about where the recovery and on the shape of the curve in our businesses most severely impacted as our physician sites, our specialty provider sites those tend to be higher growth in higher margin businesses for us and that is that mix it really what's impact.
In the business, there's nothing fundamentally are structurally going on within our business. Our business continues to be very very fundamentally sound. This as a matter of a temporary spike or decline in revenue and a really a mix issue of where that revenue is coming from but theres nothing fundamentally changing within the business itself.
Great well. Thank you. Thank you everybody for your participation today for your interest in Mckesson and certainly are here great questions I want to thank a shot up our facilitating this call for us.
Obviously this was a little longer call. Then we typically have but we thought it was a very appropriate given the environment to try to provide a little more detail.
Insight into what's going on in the business.
Mckesson has navigated challenges many times before our industry and our countries have navigated these kinds of challenges many times before.
I think it's fair to say I know I and we all probably take great inspiration from our frontline healthcare workers at our essential workers like those in Mckesson I want to thank 80000 members a team mckesson for their dedication and the inspiration. They provide me every day I am confident that we're well positioned to emerge from this is.
Experience as a stronger business and in stronger communities.
On behalf of our team at Mckesson, We wish you and your families good health and wellness.
We very much look forward to seeing you soon.
Thank you for joining today's conference call you may now disconnect and have a great day.
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