Q2 2025 McKesson Corp Earnings Call
Ladies and gentlemen, welcome to the McKesson Second Quarter of fiscal 2025 earnings conference call. Please be advised that today's conference is being recorded. At this time, I'd like to turn the conference over to Rachel Rodriguez by President of the Best Sir Relations. Please go ahead, ma'am.
Rachel Rodriguez: Thank you, operator. Good afternoon and welcome everyone to my cast in second quarter fiscal 2025 earnings call. Today I'm joined by Brian Tyler, our chief executive officer and Britt Vitalone, our chief financial officer.
Rachel Rodriguez: will lead off, followed by Britt, and then we will move to question and answer session.
Rachel Rodriguez: Today's discussions will include forward-looking statements such as forecasts about McCaffins operations and future results.
Rachel Rodriguez: Please be further to the cautionary statements in today's earnings release and presentation slides available on our website at investor.mucuston.com
Rachel Rodriguez: and to the risk factor section of our most recent annual report and other SEC filing for additional information concerning risk factors that could cause our actual result to differ from those in our forward looking statement.
Rachel Rodriguez: and information about non-gap financial measures that we will discuss during this webcast, including reconciliation of those measures to gap results, can be found in today's earnings release in presentation slides.
Rachel Rodriguez: Presentation slides also include a summary of our results for the quarter and updated guidance.
and good afternoon to everybody. Thank you for joining our call. Today, I'm a caston reported solid performance in our second quarter, generating record quarterly revenue of 93.7 billion dollars.
Rachel Rodriguez: suggested operating profit increased 7% to $1.2 billion and adjusted earnings for diluted share increased 13% to $7.7.
Rachel Rodriguez: We generated strong cash flows in the quarter, allowing us to return more capital to shareholders, and to make strategic investments to support the future growth of the business.
We're pleased with the continued progress in our differentiated oncology and bio-farm services platforms and in the strength of the pharmaceutical distribution business.
Rachel Rodriguez: Our company priorities remain the cornerstone of our enterprise strategy and the foundation for the positive impact we're driving as a diversified healthcare services company.
Rachel Rodriguez: The second quarter results in our improved outlook for the full year.
Rachel Rodriguez: Let us to increase our fiscal 2025 guidance for adjusted earnings for dilute share from the previous range of $31.75 to $32.55 to an updated range of $32.40 to $33.
Speaker Change: Before we jump into the discussion of the business, I thought it'd appropriate to just acknowledge the news that's probably a top of mind for everyone.
Rachel Rodriguez: 2024 presidential and congressional elections. Like many of you we've been watching closely, including and evaluating the views and potential implications for health care policy.
Rachel Rodriguez: and I would just say at this point that consistent with our longstanding bipartisan pragmatic approach to this, we look forward to engaging and working with the new administration and the new Congress on these important health policy issues.
Rachel Rodriguez: We feel we have a unique responsibility to leverage our resources and tools to educate and advocate for the policies that are most in line with our purpose and advancing health outcomes for all.
Rachel Rodriguez: Public Policy is an element of the overall landscape in which we operate, healthcare has been and will continue to be a dynamic market. I thought it appropriate to share a few observations about the key market trends that have been impacting our business.
Rachel Rodriguez: First, we've seen consistent and stable pharmaceutical utilization trends which support the growth of our distribution business.
Rachel Rodriguez: Reclare S1, generic sourcing operation we drive value to customers through competitive pricing and stables supply. And on the brand side, we're continuously engaged with suppliers to ensure that we deliver the highest quality of services and are fairly compensated for those services that we provide.
Rachel Rodriguez: Continued by a pharmaceutical innovation, be it GOP, one medication, cell and gene, or cancer therapies, or other scientific breakthroughs, bring really exciting opportunities for our solutions and oncology and bio-pharmac services.
Rachel Rodriguez: within the oncology platform, patient visits have grown steadily across the U.S. oncology network.
Rachel Rodriguez: Patients and Romans through Cerecan and Research Institute is increasing consistently as well, expanding availability and access to groundbreaking clinical trials. This growth enables us to empower more community-based providers and importantly to drive better patient outcomes.
Rachel Rodriguez: Within the BioFarmic Services platform, we continue to see strong market demand for our commercialization services.
Rachel Rodriguez: Our growth is supported by the launch of new brand and specialty drugs, and we're strategically expanding our services to high growth therapeutic areas. The growth of GLP1 medications and related prior authorization services is just one example of the scale of our capabilities and how we can support bio-farmant in the commercialization process.
Rachel Rodriguez: So then the medical segment, we have built a strong presence across the alternate sites of care. It's the fundamentals of the market remains solid. We believe care will continue to issue us to the alternate sites spectrum.
Rachel Rodriguez: However, in the past two quarters, we have seen instances of weakness in the primary care market as demand for certain categories of products have normalized in the post-COVID environment.
Rachel Rodriguez: In response to those recent trends, we take an effective action to drive operational efficiencies and to enhance our distribution capabilities and support of our customers.
Rachel Rodriguez: As we look across the business, we have built scale access to drive value for our customers, address the challenges in our healthcare system, and help shape the future of care. Regardless of the external environment, we're confident that our portfolio of services and solutions.
Rachel Rodriguez: are highly differentiated in the market and provide unique value propositions to our customers and that they will continue to support long-term sustainable growth for the company.
Rachel Rodriguez: Let's just gears a bit now. I thought I'd provide an update on our company priorities and strategy and then I'll turn it over to Britt to provide more details on the financial aspects of the quarter. So as always, let me start with the focus on people and culture.
Rachel Rodriguez: Our talent is at the center of everything we do and we care deeply about the development and the wellness of our team members.
Rachel Rodriguez: and October, employees across the Kesson celebrate in our annual wellness day.
Rachel Rodriguez: which we call your day your way. This is a company sponsored day off. It's our way to show appreciation for the hard work and dedication of our employees, giving them an opportunity to unplug, recharge and take care of their physical and mental well-being.
Rachel Rodriguez: and important element of our culture is also to create an inclusive workplace where everyone can do their very best work and feel comfortable being themselves. Recently, we renamed one of the best places to work for disability inclusion for the ninth consecutive year, turning a top rank score of 100.
Rachel Rodriguez: is very satisfying to see our efforts up hold and inclusive culture being recognized.
Rachel Rodriguez: Let's move on to our next priority, driving sustainable growth in our core distribution businesses.
Rachel Rodriguez: With a US pharmaceutical segment, we successfully onboarded a news strategic partner in the quarter, which contributed to the strong growth year over year.
Rachel Rodriguez: The segments results also reflect the breadth of our distribution capabilities and our commitment to drive operational excellence.
Rachel Rodriguez: and October we launched a dedicated business focused on supporting the commercialization of cell and gene therapies called Inspiro gene by McKesson.
Rachel Rodriguez: We've been building this business around challenging therapy within the U.S. pharmaceutical segment over the last few years.
Rachel Rodriguez: and the solution includes things like third-party logistics, specialty pharmacy services, tailored access and support services. This launch though, Mark's significant step in our efforts to address the complex challenges of bringing cell and gene therapies to market.
Rachel Rodriguez: and Spirigine will help leverage our unique capabilities across the oncology platform, too, ranging from clinical trial research to care delivery in the community setting.
Rachel Rodriguez: We are committed to improving patients' access to these life-changing cell and gene therapies.
Rachel Rodriguez: Moving on to our two strategic pillars of oncology and biopharma services.
Rachel Rodriguez: Within the Oncology Platform, we continue to grow the U.S. Oncology Network. In September, we were excited to announce that we signed an agreement to acquire a controlling interest in Community Oncology Revitalization Enterprise Ventures, or CORE Ventures.
Rachel Rodriguez: It's an internal business and an administrative service organization that was established by Florida Cancer Specialists and Research Institute, which itself is a leading physician-owned community oncology practice.
Rachel Rodriguez: The transaction is subject to customary closing conditions, including required regulatory clearance.
Rachel Rodriguez: Following the close of the transaction, McKesson will own 70% of CoreVentures and Florida cancer specialists will join the U.S. Oncology Network, bringing over 530 community providers across the state of Florida.
Rachel Rodriguez: They will have access to our drug purchasing services, our clinical trial services, as well as our Inomed electronic health records, and all the other services available through our network.
Rachel Rodriguez: In the past quarter, we also welcomed the Illinois Cancer Care and Tennessee Cancer Specialist Group, adding 118 providers to the U.S. Oncology Network.
Rachel Rodriguez: The growth of the U.S. Oncology Network brings exciting opportunities for us to accelerate our oncology strategy.
Rachel Rodriguez: expanding and strengthening our services across the platform. [inaudible]
Rachel Rodriguez: Upon the close of CORE Ventures, we anticipate the U.S. Oncology Network will grow to approximately 3,300 providers across 740 sites of care in 31 states.
Rachel Rodriguez: Now let's move to the biopharma services platform. We have a portfolio of technology-driven solutions focused on improving access and affordability of prescription drugs. These are complex challenges faced by many patients.
Rachel Rodriguez: and to directly impact their healthcare outcomes.
Rachel Rodriguez: I know most of you are familiar with our Prior Authorization Service, which is an example of solutions targeted at improving patient access to medication. Our solutions allow providers to initiate electronic prior authorizations at the point of prescribing, which helps patients access their medications
Rachel Rodriguez: on average 13 days sooner than they otherwise would have.
Rachel Rodriguez: We also provide integrated tech driven hub services that are designed to improve access to complex specialty therapeutics
Rachel Rodriguez: As an example, once a patient is approved for the medication, our technology services can seamlessly enroll them in a hub program that would provide them with a range of supporting services, including fulfilling insurance requirements, coordinating financial assistance.
Rachel Rodriguez: and others. Our solutions integrate a streamlined electronic platform with human intervention ensuring patients needs are supported in a timely and efficient manner.
Rachel Rodriguez: Within the affordability portfolio, our automatic coupon programs help apply co-pay savings at the point of dispensing. We also provide an electronic prescription service that eliminates paper prescriptions and faxes, which increases the efficiency, safety, and quality of the prescription medication process.
Rachel Rodriguez: These solutions provide price transparency and empower providers to make the best prescription decisions, helping biopharma address cost barriers proactively, and most importantly, bringing more affordable options to patients.
Rachel Rodriguez: During the second quarter alone, our affordability program enabled patient savings of over $2 billion in out-of-pocket costs.
Rachel Rodriguez: Moving on to our next priority of modernizing and accelerating the enterprise. We deeply believe that driving sustainable growth requires continuous improvement in how we operate the business and in how we interact with customers.
Rachel Rodriguez: In the past quarter, we launched a series of company-wide strategic initiatives to help us strengthen the business platform, improve operational efficiency, and better serve our customers.
Rachel Rodriguez: Some examples include modernizing our cloud services, leveraging AI and automation to enhance the customer experience.
Rachel Rodriguez: The continued focus on investments in technology application led us to a collaboration between Antata and Microsoft. Together, we'll utilize Azure AI to help efficiently process more than 150 million unstructured oncology documents.
Rachel Rodriguez: significantly improving the ability of Untada to extract valuable clinical information.
Rachel Rodriguez: I think this project is a good illustration of the value of the actions we're taking, which will not only generate short-term savings, but we believe further differentiate our capabilities and accelerate the growth outlook of the business.
Rachel Rodriguez: During the second quarter, we also announced an agreement to sell our Rexall and Well.ca business in Canada. This transaction will enable us to focus and prioritize investment.
Rachel Rodriguez: to further expand and grow on our two strategic pillars. Meanwhile, we remain fully committed to and confident in the strength of our Canadian distribution and biopharma businesses.
Rachel Rodriguez: Let me wrap things up before handing it over to Britt.
Speaker Change: McKesson reported a solid fiscal second quarter, underpinned by focused and disciplined execution across the enterprise. I'm extremely proud of what Team McKesson has achieved in advancing these important company priorities.
Speaker Change: We delivered strong growth in the pharmaceutical distribution business, made impactful investments in our strategic growth pillars, and took effective actions.
Rachel Rodriguez: to modernize and accelerate the enterprise. We're confident that these actions will strengthen our business and continue to support our sustainable long-term growth. And with that, I'm going to hand it to you, Britt, for additional insights into the.
Rachel Rodriguez: and Q2 Financials.
Speaker Change: Well, thank you, Brian, and good afternoon.
Speaker Change: As Brian mentioned, we delivered solid second quarter results led by strong performance in our U.S. pharmaceutical segment. Execution of our enterprise strategy delivered solid operating performance and robust cash flow results.
Speaker Change: Adjusted operating profit grew 7% to 1.3 billion dollars and adjusted earnings per dilute share of seven dollars and seven cents increased 13% compared to the prior year. These results exceeded our expectations and were above the long-term growth targets.
Speaker Change: Before I review our adjusted results, let me provide three updates.
Speaker Change: Thank you so much.
Speaker Change: First, I'll share an update on our Canadian divestiture activities. In September, we announced an agreement to sell our Canada-based Rexall and Well.ca businesses for an adjusted purchase price of approximately $148 million.
Speaker Change: We've re-measured the net assets to fair value less the cost to sell. This resulted in a gap-only charge of $643 million in the second quarter.
Speaker Change: In September, due to held-for-sale accounting treatment, we discontinued recording depreciation and amortization on the assets involved in the transaction. This had a four-cent accretive impact in the second quarter.
Speaker Change: For full year fiscal 2025, we anticipate held-for-sale accounting to drive approximately 15 cents of adjusted earnings accretion.
Speaker Change: Percussion Canada will continue to own and operate Rexall and Well.ca until the transaction closes, which is subject to customary closing conditions including required regulatory clearances.
Speaker Change: After the transaction closed, we will remain the wholesale distribution supplier to each business.
Rachel Rodriguez: This transaction enables McKesson to further focus and prioritize investments to grow our oncology and biopharma services platform.
Rachel Rodriguez: We have differentiated in leading distribution in biopharma platforms in Canada, delivering solutions to ensure the delivery of better health outcomes.
Rachel Rodriguez: Next, during the second quarter, we began a series of company-wide initiatives focused on accelerating and modernizing the enterprise, delivering operational, digital, and customer-centric efficiencies which will underpin our long-term growth.
Rachel Rodriguez: These efforts include the previously announced initiatives within the medical-surgical segment.
Rachel Rodriguez: We recorded charges of $227 million in the second quarter of fiscal 2025, including $147 million related to the Medical-Surgical Cost Optimization Program that we previously announced.
Rachel Rodriguez: We anticipate the costs related to the medical-surgical segment initiative to be substantially completed by the end of the first half of fiscal 2026, and we anticipate these costs will have a payback period of less than two years.
Rachel Rodriguez: Additionally, our acceleration and modernization program will be focused on enterprise technology opportunities and will be comprised of initiatives which will unlock innovation, modernize our technology operating model and infrastructure, and increase customer centricity.
Rachel Rodriguez: meeting customer and market needs and driving further leadership in the areas of oncology and biopharma services.
Rachel Rodriguez: These initiatives will generate meaningful benefits and savings over the long term.
Rachel Rodriguez: We anticipate the costs related to the acceleration program will be substantially complete in fiscal 2028.
Rachel Rodriguez: will generate approximately 250 million dollars in benefits over the next five years with an annual run rate benefit of approximately a hundred million dollars by the end of fiscal 2030.
Rachel Rodriguez: Finally, as a result of Rite Aid's emergence from bankruptcy in August of 2024.
Rachel Rodriguez: We reassessed our initial estimates made in conjunction with the previously reserved balances.
Rachel Rodriguez: which included cash received as part of the bankruptcy emergence resulting in a reversal of $203 million recorded in our U.S. pharmaceutical segment during the second quarter of fiscal 2025.
Rachel Rodriguez: remainder of my comments will refer to our adjusted results and let me start with our second quarter results
Rachel Rodriguez: Consolidated revenues were 93.7 billion dollars, an increase of 21 percent.
Rachel Rodriguez: led by strong growth in the U.S. pharmaceutical segment.
Rachel Rodriguez: resulting from the onboarding of a new strategic partner and increased prescription volumes, including higher volumes for retail national account customers, specialty products, and GLP-1 medication.
Rachel Rodriguez: Adjusting for the addition of a new strategic partner, consolidated revenues increased 8% versus the prior year.
Rachel Rodriguez: Gross profit was 3.2 billion dollars, an increase of seven percent.
Rachel Rodriguez: primarily a result of specialty distribution growth within the U.S. pharmaceutical segment including our provider solutions business.
Rachel Rodriguez: and higher distribution volumes resulting from the new strategic partner.
Rachel Rodriguez: Operating expenses increased 7% to 2 billion dollars driven by higher expenses to support growth in the US pharmaceutical segment.
Rachel Rodriguez: We're pleased with the progress and discipline we're making in managing our cost structure, as reflected in our operating expense to gross margin ratio, while also continuing to invest in the business to bring innovation to our products and to our partners.
Rachel Rodriguez: Operating profit was 1.3 billion dollars, an increase of 7%.
Rachel Rodriguez: Year-over-year results benefited from continued growth in the U.S. pharmaceutical segment and our Canadian distribution business, partially offset by lower volumes in the medical-surgical solution segment.
Rachel Rodriguez: Interest expense was $72 million, an increase over the prior year, resulting from higher average balances of our loan portfolio throughout the quarter.
Rachel Rodriguez: The effective tax rate for the quarter was 21% which was in line with our guidance driven by the recognition of net discrete tax benefits of 44 million dollars in the quarter.
Rachel Rodriguez: Second quarter diluted weighted average shares outstanding was 129.3 million, a decrease of 4%.
Rachel Rodriguez: In second quarter, earnings per diluted share increased 13% to $7.07, which was ahead of our previously expected guidance range. Year over year, growth was driven by strength in the U.S. pharmaceutical segment and a lower share count.
Rachel Rodriguez: Turning to second quarter segment results which can be found on slides 8 through 11 and starting with U.S. Pharmaceutical.
Rachel Rodriguez: Revenues were $85.7 billion, an increase of 23%.
Rachel Rodriguez: Revenue growth reflects increased prescription volumes, including higher volumes from retail national account customers.
Rachel Rodriguez: Specialty Products, and GLP-1 medication.
Rachel Rodriguez: offset by the anticipated decline of biosimilar volumes with a retail national account customer.
Rachel Rodriguez: During the quarter, we successfully onboarded a new strategic partner.
Rachel Rodriguez: Revenues from GLP-1 medications were $10.4 billion in the quarter, an increase of approximately $3.3 billion, or 47%, when compared to the prior year.
Rachel Rodriguez: For the quarter, operating profit increased 11% to $902 million, driven by growth in the distribution of specialty products to health system and specialty providers, bolstered by the continued growth of our oncology platform.
Rachel Rodriguez: Moving to prescription technology solutions.
Rachel Rodriguez: Revenues were 1.3 billion dollars, an increase of 11 percent, driven by increased prescription volumes in our third-party logistics and technology services businesses.
Rachel Rodriguez: Segment operating profit increased 4% to $218 million, reflecting increased demand for our technology solutions, including growth in our affordability product suite and higher volumes in our pharmacy automation solutions.
Rachel Rodriguez: Operating profit was also impacted by higher investments to support future growth across the business.
Rachel Rodriguez: Turning to medical-surgical solutions, revenues increased 4% in the quarter to 2.9 billion dollars, driven in part by higher levels of specialty pharmaceuticals and other illnesses and related volumes in the primary care channel.
Rachel Rodriguez: As a reminder, each illness season is unique. The timing and severity level of each illness season can drive variability from quarter to quarter across several products within this segment.
Rachel Rodriguez: including seasonal vaccines, illness season testing, foot traffic in primary care sites, and over-the-counter product sales.
Rachel Rodriguez: Second quarter operating profit decreased 4% to 243 million dollars due to lower volume levels in the primary care channel as compared to the prior year including the impact from customer and product mix.
Rachel Rodriguez: These results were in line with our expectations.
Rachel Rodriguez: Next, let me address our international results.
Rachel Rodriguez: Revenues for 3.7 billion dollars, an increase of seven percent.
Rachel Rodriguez: An operating profit was $100 million, an increase of 12%, driven in part by higher pharmaceutical distribution volumes in the Canadian business compared to the prior year.
Rachel Rodriguez: Second quarter operating profit included four cents of earnings accretion resulting from the held for sale accounting related to the announced sale of our Canada-based Rexall and Well.ca businesses.
Rachel Rodriguez: Wrapping up our segment review with corporate.
Rachel Rodriguez: Corporate expenses were $172 million, which included pre-tax losses of $15 million, or $0.09 per share, related to equity investments within the McKesson Ventures portfolio.
Rachel Rodriguez: compared to pre-tax losses of $10 million, or $0.06 per share, in the second quarter of fiscal 2024.
Rachel Rodriguez: As we've previously discussed, McKesson Ventures' impact on consolidated financials can be influenced by the performance of each individual investment, quarter to quarter, which may result in gains and losses, the timing and magnitude for which can vary for each investment.
Rachel Rodriguez: Let me turn to cash and capital deployment, which can be found on slide 13. The end of the quarter with $2.5 billion in cash and cash equivalents.
Rachel Rodriguez: During the quarter, we had free cash flow of $1.9 billion, which included $218 million of capital expenditures for technology, data, and analytics to support our growth priorities, as well as investments in new and existing distribution centers.
Rachel Rodriguez: This strong cash flow performance is a reflection of our operating execution and disciplined working capital management.
Rachel Rodriguez: In the second quarter, we returned $1.6 billion of cash to shareholders, which included $1.5 billion of share repurchases and $80 million in dividend payments.
Rachel Rodriguez: As a reminder, our cash position, working capital metrics, and the resulting cash flows can each be impacted by timing, which includes the day of the week that the quarter ends on and therefore can vary from quarter to quarter.
Rachel Rodriguez: Now let me discuss our fiscal 2025 outlook.
Rachel Rodriguez: As a result of our second quarter performance and our confidence in the outlook over the balance of the year, we are raising and narrowing our guidance range for fiscal 2025 adjusted earnings per diluted share to $32.40 to $33.
Rachel Rodriguez: We remain confident in our differentiated oncology and biopharma services assets and platforms and our strategy to advance McKesson as a diversified healthcare services company as we accelerate and modernize the enterprise.
Rachel Rodriguez: In the U.S. pharmaceutical segment, our core distribution business continues to demonstrate its strong value proposition to our customers.
Rachel Rodriguez: We anticipate revenues will increase 16-19% and operating profits increase 9-11%.
Rachel Rodriguez: This updated segment outlook incorporates the strong second quarter performance as well as further growth in specialty distribution, including our differentiated plasma and biologics businesses and growth from retail national account customers.
Rachel Rodriguez: In July, we successfully onboarded a new strategic partner. This partnership is a testament to our leading distribution and sourcing capabilities and our strong customer value proposition.
Rachel Rodriguez: Let me take a moment to discuss the agreement we announced and signed in September to acquire a controlling interest in Community Oncology Revitalization Enterprise Ventures or CORE Ventures, an internal business and administrative services organization established by Florida Cancer Specialists and Research Institute.
Rachel Rodriguez: McKesson will purchase a controlling interest representing 70% ownership for approximately 2.49 billion dollars in cash. We anticipate financing the transaction with a mixture of cash and debt.
Rachel Rodriguez: Transaction is subject to customary closing conditions including required regulatory clearances.
Rachel Rodriguez: This transaction marks an important step as we continue to grow our oncology platform with a goal of improving and expanding patient access to quality cancer care close to home while reducing the overall cost of care for the patient.
Rachel Rodriguez: Following completion of the transaction, Core Ventures will be part of McKesson's Oncology Platform, and financial results will be reported within McKesson's U.S. pharmaceutical segment.
Rachel Rodriguez: We estimate this transaction to be $0.40 to $0.60 accretive in the first 12 months following the regulatory approval and closing of the transaction.
Rachel Rodriguez: We also estimate by the end of the third year following completion of this transaction to achieve accretion of approximately $1.40 to $1.60.
Rachel Rodriguez: We have not included any financial results from this transaction in our updated fiscal 2025 outlook.
Rachel Rodriguez: This transaction will accelerate McKesson's Oncology Strategy by providing opportunities to enhance and expand existing offerings across our Oncology Platform.
Rachel Rodriguez: It will allow us to enhance quality cancer care, expand patient access, and accelerate clinical development.
Rachel Rodriguez: In the prescription technology solutions segment, we anticipate revenues to increase 8 to 12 percent, a modest decline from the prior guidance, and we anticipate that operating profit will increase 11 to 15 percent.
Rachel Rodriguez: The updated revenue outlook for the segment reflects continuation of product launch delays and slower manufacturer program ramp in our third-party logistics business.
Rachel Rodriguez: For this segment, we remain confident in our ability to achieve operating profit growth at or above the long-term growth rate targets on an annual basis.
Rachel Rodriguez: As we previously communicated, we anticipate the revenue and operating profit growth will not be linear and will vary from quarter to quarter.
Rachel Rodriguez: driven by several factors which include the timing and trajectory of new product drug launches,
Rachel Rodriguez: the annual verification programs that we provide to our customers that occur in our fiscal fourth quarter and the sizing timing of investments to support and expand our product portfolio
Rachel Rodriguez: Moving to medical-surgical solutions, we anticipate revenues to increase one to five percent and operating profit to be at the low end of the initial guidance range of six to eight percent.
Rachel Rodriguez: As market conditions have normalized following the COVID-19 period, we have noted instances of lower volumes in the primary care channel. This has led to lower sales and operating profit contributions throughout the first half of the fiscal year.
Speaker Change: As Brian mentioned, in response to the market conditions, we've previously announced a series of business rationalization initiatives within the segment to drive operational efficiencies and increase cost optimization efforts.
Speaker Change: In addition to delivering improved operating performance, these actions will result in efficiencies across the segment and greater alignment with our customers and partners.
Speaker Change: We anticipate these initiatives will deliver approximately $100 million in cost savings in fiscal 2025, beginning with the third fiscal quarter, and will have a payback period of less than two years.
Speaker Change: Our updated full-year outlook reflects first-half results, trends that we're observing in the markets that we serve, and the impact from the business rationalization initiatives that I previously announced.
Speaker Change: The medical-surgical business is well-positioned with an unmatched breadth of products and depth of services across alternate sites of care led by an unparalleled customer focus.
Speaker Change: We remain confident in our ability to continue delivering long-term growth as we support our customers' evolving needs with a diversified portfolio of products and solutions.
Speaker Change: Finally, in the international segment, we anticipate revenues to increase 5% to 9% and operating profits to increase 16% to 20%.
Speaker Change: We're pleased with second quarter performance in our Canadian distribution business.
Speaker Change: Anticipate continued growth throughout the rest of fiscal 2025.
Speaker Change: As I mentioned at the beginning of my remarks, we recently announced an agreement to sell our Canada-based Rexall and Well.ca businesses.
Speaker Change: This transaction is subject to customary regulatory approval. We anticipate this transaction will close in our fiscal fourth quarter. And based on this anticipated timing, our updated outlook assumes approximately 15 cents of earnings accretion related to the held for sale accounting.
Speaker Change: We also remain committed to exit and fully divest our European businesses.
Speaker Change: As a reminder, Norway remains the only operating country in Europe that we have not entered into an agreement to sell. Contributions related to operations in Norway are included in the fiscal 2025 outlook for the segment.
Speaker Change: We do intend to exit Norway as part of the completion of our European exit.
Speaker Change: In the corporate segment, we anticipate expenses to be in the range of $510 to $560 million, which incorporates the impacts of $15 million of pre-tax losses related to equity investments within the McKesson Ventures portfolio in the second quarter.
Speaker Change: Now moving below the line, we anticipate interest expense to be approximately $240 to $260 million, reflecting the impact from increased average balances of the company's loan portfolio and higher interest rates throughout the second quarter.
Speaker Change: We anticipate income attributable to non-controlling interest to be in the range of $180-$190 million, reflecting the success of Claris One's generic sourcing operations.
Speaker Change: We also anticipate that the tax rate in the third quarter will be higher than the fourth quarter due to the timing of discrete tax items.
Speaker Change: Turning to cash flow and capital deployment. We anticipate free cash flow of approximately 4.8 to 5.2 billion dollars. Our working capital metrics and resulting free cash flow will vary from quarter to quarter and are impacted by timing, including the day of the week that marks the close of a quarter.
Speaker Change: Our guidance assumes an increase to full year share repurchases.
Speaker Change: Based on our strong free cash flow and cash position, we've updated our guidance to repurchase approximately $3.2 billion of shares in fiscal 2025 from our previous guidance of $2.8 billion.
Speaker Change: As a result of this share repurchase activity, we estimate weighted average diluted shares outstanding to be in the range of approximately $127 to $129 million.
Speaker Change: Wrapping up fiscal 2025 guidance.
Speaker Change: We anticipate revenue growth of 15-17% and operating profit growth of 13-15% compared to the prior year.
Speaker Change: For fiscal 2025, we anticipate earnings per diluted share of $32.40 to $33, which represents growth of 18% to 20% as compared to fiscal 2024.
Speaker Change: In closing, our second quarter results demonstrate outstanding execution against our strategic growth pillars.
Speaker Change: In addition to our strong operating performance, our acceleration and modernization initiatives are creating a more efficient organization, delivering meaningful differentiation.
Speaker Change: Our Fiscal 2025 Outlook combines continued operating momentum across the business in the second half of the year with a disciplined capital deployment approach.
Speaker Change: We remain focused on strategically investing in long-term opportunities that will increase returns and create shareholder value
Speaker Change: With that, let's move to our Q&A session.
Speaker Change: Thank you, sir. If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. And then once again, please press star 1 to ask a question.
Speaker Change: Our first question comes from Lisa Gill with JCP Morgan
Lisa Gill: Thanks very much and good afternoon. Thanks for all the detail, Britt. I just really want to go back to the key drivers of what's happening on the U.S. pharmaceutical side of the business. You know, we've had some changes in Part D, especially around catastrophic
Speaker Change: at a pocket cost for the senior population. We heard some of that from managed care. So I'm just curious if you can maybe just talk to us about.
Speaker Change: you know, what specifically you're seeing that's driving that higher growth rate. And obviously, you know, Part D doesn't impact Canada, but you see strong volumes there as well. So maybe if you can just give us a bigger picture as to what we're seeing as the key drivers of what's really driving the utilization trends right now.
Speaker Change: Well, thank you for that question, Lisa. We've seen utilization trends over the last several quarters have been consistent and growing year over year.
Speaker Change: We've not seen a significant change in the utilization rates or trends.
Speaker Change: in this quarter that we've seen in the last few.
Speaker Change: In our U.S. pharmaceutical segment, first of all, we've added a new strategic partner. We're really pleased with that.
Speaker Change: We think that that really is a reflection of all the services and capabilities that we have across the segment.
Speaker Change: We've continued to grow our specialty capabilities and certainly our sales of products to specialty providers. That's continued to grow nicely and that was part of my remarks in terms of the second quarter.
Speaker Change: the addition of 118 providers year-to-date.
Speaker Change: That's a reflection of the value that we have across the oncology platform, and that's also adding really to the flywheel effect of the growth that we're seeing in the segment.
Speaker Change: Next question, please.
Speaker Change: And our next question comes from Kevin Caliendo with UBS.
Kevin Caliendo: Great, thanks for taking my question.
Kevin Caliendo: A lot of volatility in RXTS and the medical segment. Has it gotten harder to model this? And obviously, there's been some variability. And I guess specifically on RXTS, you took down the guidance for the revenues, but not really for income. We understand there was cost-cutting done on the medical side.
Speaker Change: Was there anything that's impacting RxJS or?
Speaker Change: like why was there no real impact to the eBit line in that business?
Speaker Change: Thank you. Bye-bye.
Speaker Change: Thanks for that question. So let me just start by reminding you that there are a lot of factors that drive quarter-to-quarter variability in this business and I talked about some of those.
Speaker Change: in my prepared remarks for that. The utilization trend, timing trajectory of new product launches, product delays and supply shortages. And I'll come back to that here in a second.
Speaker Change: We talked about payer requirements, including some of the utilization management requirements that they have that impact our prior authorization programs as an example. So there's a lot of things that
Speaker Change: that happen within this business that will create some of that quarter-to-quarter variability. We like to look at this business on an annual basis. I think when you look at it on an annual basis...
Speaker Change: We've had good consistent growth over the last
Speaker Change: several years. In terms of the revenue, you know, we have talked over the last couple quarters about some impacts of program or product delays within our 3PL business, not
Speaker Change: Those are more delays that are either regulatory in nature or customer-specific. And so that is the driver for the modest change we made to our revenue outlook. And as we've talked previously, well, 3PL is about 50% of the revenue within the segment.
Speaker Change: It drives less than 5% of the AOP for this segment. So with the change in revenue, again, being modest, it didn't have a very material impact on our AOP guidance for the full year.
Speaker Change: Next question please.
Speaker Change: And our next question comes from Daniel Grossleit with Citi.
Daniel Grossleit: Hi, thanks for taking the question and congrats on another strong quarter here. I'd like to focus a little bit on the med surge segment. You know, guidance does still imply a pretty significant step up in adjusted operating profit. So I was hoping you could maybe walk us through or bridge us from 2Q to 3Q to 4Q and how you expect to achieve that profitability and if there's any change in how you're thinking about the long-term prospects of this business.
Speaker Change: Yeah, I'll start with maybe the mechanical piece, and I'll let Brian talk about the longer term view on the business.
Speaker Change: What we've seen in this business is slower volumes in primary care in the first half of the year. In our second quarter, the business actually performed a little bit better than we had anticipated.
Speaker Change: So I'd say there is modest improvement. And we saw some stronger foot traffic towards the end of the quarter than we had anticipated, kind of mid quarter. As you think about the bridge for the first half to the second half.
Speaker Change: you know you could model about 20% growth first half over second half in terms of the year-over-year.
Speaker Change: And if you think about the initiatives that I talked about and the savings that we anticipate in the second half of the year, it's about $100 million in the second half of the year.
Speaker Change: You know, what we're not really anticipating or the business is not required to grow significantly outside of that. So if you take the $100 million that I talked about, I think what you'll see is that our anticipation for the business outside of those initiatives is pretty flat year over year in the second half.
Speaker Change: And I would just say, longer term, as you think about the macro trends in health care, you think about the cost pressures, you think about the alternate site markets being low-cost settings of care or lower-cost settings of care being more accessible to people that need to consume them, I think we've got a terrific footprint against those sort of secular long-term trends. And we've got
Speaker Change: Leading breadth of product. We've got growing private brands. We've got a lab
Speaker Change: a leading lab program, pharmaceuticals, specialty pharmaceuticals, so we think we're really well positioned against long-term trends. We're not adjusting long-term targets and intra-quarter, there are long-term targets for a reason. I think if you look back five years across all our segments, you see we've performed
Speaker Change: Well, over a long term against those targets, not necessarily quarter to quarter, but over a long term horizon, we've been able to meet those commitments.
Speaker Change: Next question please.
Speaker Change: Sinclair Linda. Sorry, can you hear me?
Speaker Change: Hello?
Speaker Change: Yeah.
Speaker Change: Yes, we're here. Great. Thanks for taking the question. Hey, I wanted to talk about...
Speaker Change: with U.S. Oncology a little bit, and obviously with the acquisition of fluorocancer. I think in the past you could have noted that U.S. Oncology sees over
Speaker Change: like 15% of all cancer patients in the community setting. Can you give us an estimate of maybe what that market share might look like?
Speaker Change: following the addition of FCS.
Speaker Change: And then maybe if you could talk a little bit about sort of what the decision-making that you go through when Deciding either to acquire something like Florida Cancer or just going into an agreement with maybe a group practice You know in other states and then maybe lastly your thoughts on moving into other specialties besides oncology. Thanks
Speaker Change: We've been after this and in this business for a very long time, and as we think about growing and expanding the market, or our network.
Speaker Change: And then how do we leverage best practices across the various network sites to continue to accelerate and enhance that quality care? When we think about growing, we grow in a couple of ways. You know, we'll assess a certain geography and encatchment area, assess payer dynamics.
Speaker Change: other market dynamics, demographics, obviously.
Speaker Change: and then we want to get an anchor site that we can then build off of and so we'll in some instances recruit oncologists into our practice.
Speaker Change: In other instances, we may get a small practice and essentially merge or join it in, and sometimes we enter long-term managed service agreements.
Speaker Change: with these enterprises. So we have multiple ways that we can accomplish that growth and really we have to make that evaluation on a market-by-market, case-by-case basis. But what we want to be is flexible and open to be as attractive to continue to attract doctors to our network as we can be.
Speaker Change: Next question, please.
Speaker Change: Thank you.
Speaker Change: And we'll move to our next question from Brian Tankwilett with Jefferies.
Brian Tankwilett: Hey, good afternoon, guys, and congrats. I mean, Brett, as I think about Biosimilars as a whole, obviously that was an impact to this year with the guidance change last quarter.
Brian Tankwilett: So, as we look down two to three years, are there any notable biosimilars that we should be thinking about? Or maybe how are you thinking about the dynamics with upcoming biosimilar releases?
Speaker Change: Thank you. Thank you.
Speaker Change: Yeah, thanks for the question. I think there's really two components to the question that you asked, you know, in terms of the revenue impact.
Speaker Change: to the segment.
Speaker Change: We certainly saw a biosimilar introduction into the retail segment.
Speaker Change: We are continuing to service the Innovator product, but the Biosimilar that it was switched to is not part of our distribution. As we think about Biosimilars, just generally speaking,
Speaker Change: We think that, first of all, they provide more clinical choice, and second of all, we believe that they offer better value to patients.
Speaker Change: And for a wholesale distributor like McKesson, where we can provide capabilities and services for our customers using the platforms that we have in place, they'll generally offer better margins for us.
Speaker Change: in areas like oncology or other specialty provider areas where we have more assets to bring to the table, you know, we'll be able to provide more services and provide more value.
Speaker Change: Generally speaking, that'll be better margins than the branded or the specialty drug. So we think there's still a good opportunity, particularly in Part B, in the Part B section. And as biosimilars continue to develop and are introduced,
Speaker Change: That will be an opportunity for McKesson to utilize its capabilities and value proposition to drive biosimilar introduction.
Speaker Change: Next question, please
Speaker Change: And our next question comes from Elizabeth Anderson with Evercore ISI.
Elizabeth Anderson: Hi guys. Thanks so much for the question. Maybe just one clarification question and one sort of conceptual question. As we think about the long-term guide, thank you for talking about the EPS growth. Can you just confirm that there's the operating income growth component and contribution to that is also unchanged or if there are any differences how you would think about that? And then secondly, maybe if you could talk about Florida Kenderson area, you know, obviously you acquired the MSO portion of the business. Are there sort of capabilities out of that that you can as you've sort of started to look at that asset a little bit more like that you think you can sort of expand across other parts of USO and if you could talk about those, those would be helpful. Thank you.
Elizabeth Anderson: Thank you.
Speaker Change: Let me start and I'll handle the mechanical piece of this. We have not made any adjustments to our long-term target rates. In terms of the consolidated adjusted operating profit targets, it's still six to eight percent.
Speaker Change: So at that, yes, and I'll just remind everybody we're still.
Speaker Change: through Closing Conditions.
Speaker Change: including customary regulatory processes. So.
Speaker Change: Let me not talk just maybe specifically about them, but generally how we would think about this And this is true anytime we add a practice into the network I mean we have we have specific criteria for what is an attractive
Speaker Change: new oncologist, new practice, or new addition to the U.S. Oncology Network.
Speaker Change: and our hope in all of those cases.
Speaker Change: is that we can share best practice, we can learn from each other, we can...
Speaker Change: expand, find new programs, services that they may have established in their community that we can then leverage across the rest of the network. So we always want to come into this with the idea that we're a learning organization and we're open to finding ways that both
Speaker Change: We can improve the practice that is joining USAN, but they can help improve the other USAN practices as well. So that's very much part of every thesis that we pursue.
Speaker Change: Next question, please
Speaker Change: And our next question comes from Eric Percher with Nefron Research.
Eric Percher: Thank you. A question on inventory and cash flow.
Eric Percher: have any ability to build in a quarter.
Speaker Change: whether there are fluctuations there.
Speaker Change: Yeah, look, we manage our working capital based on customer demand, based on market needs.
Speaker Change: and you know our role in this is to be as efficient as possible but make sure the product is there.
Speaker Change: And so, you know, the demand for GLP-1s has varied from quarter to quarter for a variety of reasons. And customer demand has continued to be strong. So we've just continued to try to meet the demand as it comes in and have the appropriate level of supply and have the product.
Speaker Change: at the right place at the right time. That's probably the best way that I can answer this and utilizing the efficient working capital systems and programs that we have in place.
Speaker Change: Next question, please.
Speaker Change: Ms. Davis, please make sure your mute function is turned off so we can hear you.
Ms. Davis: Thank you, I apologize. So thank you for taking my questions, congrats on the quarter. I was hoping we could dig a little deeper in the new and encouraging business.
Ms. Davis: How can you use leverage in this platform to maybe forward some of your clinical trial solutions and how are you thinking about this platform as it relates to investments made by Florida cancer specialists given you're integrating them into the broader platform?
Speaker Change: I missed the first part of your question you said what about what what business are you asking about?
Speaker Change: and Spirogen.
Speaker Change: Oh, I'm sorry. I'm sorry. I missed that. Yeah. Yeah. I'm traveling. So it's noisy in the background.
Speaker Change: Yep, okay, I've got it now. I just missed that first part.
Speaker Change: So we're really excited about InspiroGene. We've been working on this kind of quietly internally for a couple of years, bringing together the capabilities we have across the organization. Some, you know, long established like 3PL. Others, some of the patient support and hub-like services that we offer.
Speaker Change: as you think about these cell and gene therapies, they're going to be, you know, very expensive, very complex supply chain and logistics and very complicated patient support and information services are going to have to go around it. So we thought we'd reach the point.
Speaker Change: in the program. We're bringing these together into a single entity.
Speaker Change: to focus on these highly specialized drugs with these highly specialized manufacturers is an important thing to do.
Speaker Change: Now, we do believe over time we will continue to find capabilities across the company as these markets mature and as the needs become more known to find ways to
Speaker Change: support, you know, these cell and gene therapies even earlier in their life cycle. And clearly, a large portion of the pipeline in cell and gene is oncology-related, so we think our assets in oncology, whether that's USON, Inomed, SCRI or other, will become relevant.
Speaker Change: please
Speaker Change: And our next question comes from Stephen Baxter with Wells Fargo.
Stephen Baxter: Hi, thanks. I was hoping that you could remind us the product mix for the medical business. What percentage is Source versus what percentage is McKesson brand?
Speaker Change: And then how much of the brand product do you manufacture yourself versus contract manufacturer? And I guess just big picture, like how should we think about the key areas of product differentiation and customer preference to keep this business from becoming less focused on price than we might otherwise expect over time? Thanks.
Speaker Change: So, first off, we do not own any manufacturing capability. So, we will contract for the product, essentially source the product.
Speaker Change: under our own label. And we have been spending time over the past years with some intentionality of continuing to expand our private label, but also evolving our programs that can support our national brands. I mean, we want our customers to have choice. We want them, if they...
Speaker Change: have a preference for the national brand product that should be available, but we want to have a strong value proposition around our private brand for those that are more focused on
Speaker Change: you know, the value, the quality and the relative price point that that offering can bring. So I don't believe we disclose how big our private brand for various competitive reasons are, but it's growing, it's been continuously growing and we continue to invest in the growth and expansion of that.
Speaker Change: Next question, please.
Speaker Change: And our next question comes from George Hill with Deutsche Bank.
George Hill: Thank you. Thank you.
George Hill: Hey, good evening guys, and thanks for taking the question. Brian or Brent, I actually have a question about Sarah Cannon, and I'm wondering if you guys can talk about
Speaker Change: what percent of practices or oncologists are now leveraging the Theracanin relationship versus you know called a year ago or six months ago and I don't know if you're willing to provide any like what is the right way to think about how accretive that relationship is to the practice by increasing the number of oncologists and patients that can participate in clinical trials?
Speaker Change: The
Speaker Change: The number of youths on clinicians that are participating in clinical trials is growing and that is the result of a very intentional effort on our part post
Speaker Change: the announcement of the joint venture to think about how we created the right structures
Speaker Change: the right models to take up that participation. That was a big thesis of the joint venture was that tighter alignment with USAN and SCRI could increase uptake. And that has the dual benefit, being good for us, but it's actually good for patient care in the communities. I mean, as we expand.
Speaker Change: Our number of practices, there's more convenient care, more convenient, you know, appropriate cutting edge care that can be provided more locally to more people to make sure that they're getting patient outcome. So that's a number we continue to expect to expand and grow over the coming years.
Speaker Change: Yeah, and just maybe to put an estimate around that, we've seen approximately an increase in the number of accruals of about 20% since we started the joint venture. So to Brian's point, we're really pleased with that.
Speaker Change: Thank you. Bye.
Speaker Change: Was it good?
Speaker Change: And our next question comes from Alan Lutz with Bank of America.
Alan Lutz: Good afternoon and thanks for taking the questions. Brid, one for you. On Clara Swan, you mentioned some strength in the quarter. That business growing organically. Obviously, you're adding a large client there. Trying to think through how to think about the contracts for generics. You have some new volume flowing through. How should we think about the timing benefits of you buying better and how to think about the benefit on the P&L versus working capital? Thanks.
Speaker Change: Yeah, thanks for the question. So you know clearly adding a new strategic partner is going to bring some additional...
Speaker Change: volume to the to the joint venture but you know we really do a lot of different things in terms of partnering with you know our 200 plus partners on Claris One. You know there's certainly an aspect of looking at cost and that's part of what we do for our customers to provide the best cost possible but we're also working with our member partners in terms of making sure that we have the right supply.
Alan Lutz: and so we'll do things to work with our partners to do long-term awards and...
Alan Lutz: and other types of arrangements that are.
Alan Lutz: Again, a little more stability in terms of product. So.
Alan Lutz: You know, I think there's a number of different things. It's certainly evolved over time. It's providing really good benefits in terms of best cost to our customers. But increasingly, looking at supply and service levels has become just as important.
Alan Lutz: It's important for us to make sure that when a patient shows up at a pharmacy counter that the product is there. And so we're really focused on working with our partners to make sure that we have the adequate and right supply as well.
Speaker Change: Question, please.
Speaker Change: And our next question comes from Erin Wright from Morgan Stanley.
Erin Wright: Great, thanks. A question on MedSurge quickly. Just similar to last quarter, you did note that that normalization and utilization across that primary care segment, but excluding 100 million in savings in the second half, it's still subdued growth in the second half, I guess.
Alan Lutz: Can you speak to a little bit more about the nature of this solar utilization? Is it just respiratory? Would there be some seasonal components to think about there? And then just how we think about the quarterly progression. And can you just remind us, too, those cost savings initiatives, where you are with that in terms of the nature of those and how that flows through as well in terms of what's completed and what's to come? Thanks.
Speaker Change: Yeah, thanks for the questions. A lot to unpack there. Let me maybe just start on, in terms of the initiative, those initiatives start in the third quarter, so they're really just underway now. We have confidence that we can generate about a hundred million dollars of savings in the back half of the year. In terms of the cadence, you know, I would say probably more towards the back half of the year, in the fourth quarter.
Alan Lutz: More than the third quarter
Alan Lutz: for just getting underway with us.
Speaker Change: You know, we are looking at an illness season that's similar to what we've seen in prior years. Each illness season is pretty unique. Last year,
Alan Lutz: was a little bit of a softer illness season than the prior year, so...
Alan Lutz: We'll see how the severity of the illness season plays out, but we're not anticipating anything
Alan Lutz: significantly more than we've seen over the last few years. So we believe that the business is in a really good spot, as Brian's talked about. We have a wide range of services and capabilities across all the alternate sites of care.
Alan Lutz: We were encouraged by the back half of the second quarter being a little bit stronger than we had anticipated. But as we go to the back half of the year, we're anticipating the trends will look very much like they did in the first half of the year.
Speaker Change: It's time for one more question, please
Speaker Change: And our last question is from Michael Turney with Lear, Inc. Partners.
Michael Turney: Afternoon. Thanks for taking the question. Maybe if I could just go back to RXTS and the ramp dynamics. I fully understand that this can have quarterly fluctuations, but as you think about the ramp into the...
Speaker Change: end of the year as part of the reiterated guidance on the Just Operating Profit side.
Speaker Change: Where do you feel like you have the most control versus some of the market dynamics, customer dynamics that are out of your control?
Speaker Change: as you think through the level of visibility you have in the build there. Obviously, the business has grown fairly robustly, prior authorization work being in the way, but curious as you sit here today, how you risk weight some of the metrics that goes into the build for the guidance.
Speaker Change: Thank you.
Speaker Change: So I'd say a couple of things. I mean, one is some of our visibility into the programs that we've got under contract and growth trajectories that we see from those.
Speaker Change: evaluation of our sales pipeline. I would remind you that in our second half of the year we'll go through our blizzard season so that's a typical seasonal you know pick up for that business.
Speaker Change: And we expect this year to be largely in line with last year, so that's going to help drive some of that back-end growth. Britt spoke to some of the volatility in the revenue with 3PL, which really isn't going to have a material impact on.
Speaker Change: on the AOP, but I would say just given the progression we've seen in the business at this point in the year and what we see in our reviews of the business, we've got confidence in the second half.
Speaker Change: Okay, well with that, let me thank everybody for joining the call. I appreciate the always great questions.
Speaker Change: Lisa, thank you for facilitating the call. McKesson reported good results in our fiscal second quarter. The improved fiscal 2025 guidance...
Speaker Change: reflects our confidence in the strength of underlying business, reflects our commitment to our company priorities and strategy. I would be remiss if I didn't thank the 50,000 plus employees across the company for their consistent execution.
Speaker Change: for their dedication to our customers, their passion, their conviction, and the urgency with which they move together. We're improving health care in every setting, one product, one partner, one patient at a time. Thanks again, everybody. I know there was a lot of distracting news flow today. We appreciate you joining us. Have a terrific evening.
Speaker Change: And ladies and gentlemen, thank you for joining today's conference call. You may now disconnect and have a great day.
Speaker Change: Thanks for watching!