McKesson Corporation (NYSE:MCK) Q3 2024 Earnings Call Transcript

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And when you think about like a U.S. oncology, Britt highlighted several places where we think we can use this kind of technology to make a better patient experience, make our provider experience better, and to continue to drive efficiencies through that business. So, we will continue to be committed to investing back in the business where we see good financial returns tied to our strategy.

Rachel Rodriguez: Next question, please?

Operator: And next will be George Hill with Deutsche Bank. Please go ahead.

George Hill: Hey, good afternoon, guys, and thanks for taking the question. Britt, first one is just kind of a point of clarification. When you say GLP-1s as an EBIT headwind, you mean to margins, not to dollars. And then for Brian, I have a follow-up question on oncology. I guess could you just kind of talk about the Greenfield opportunity that remains in the USO business and do you think more about the opportunity to add providers, kind of add regions or add services into the installed base as kind of the way to continue to grow that business? Thank you.

Brian Tyler: I’ll start with your second question and then Britt can come on. So, I talk about three ways to drive the U.S. oncology business. One is to acquire a practice in a geography where not, obviously, to add providers to an existing geography. And in instances where our criteria are met, meaning we think we can attract the right level scale, we can find oncologists that want to practice consistent with the way we practice oncology in our network, we are not afraid to Greenfield. Obviously, adding to an existing is faster, acquiring an established practice that we feel fits our criteria is probably second, and Greenfield would be third, but we have all those avenues open to us. And so, we look at the criteria, the population, the growth, the payer mix, these all kind of go into our formula as we identify which of those three avenues is the most viable.

Britt Vitalone: And the answer to your first question is we’ve talked about GLP-1s previously, and today we are talking about margin rate. They usually come at a lower margin rate than other products that we distribute. And as I mentioned, they have been an operating profit headwind year-over-year.

Rachel Rodriguez: And we have time for one more question, please?

Operator: Certainly. That question will come from Stephen Baxter with Wells Fargo. Please go ahead.

Unidentified Analyst: Hi, this is Carol [ph] on for Steve. Just a follow-up on the prescription technology segment of GLP-1s. Now that we’re starting to come up against some harder coms, just how should we think about growth for this business tied to new versus renewed prescriptions? And what are some of the other categories we should be focused on as growth drivers outside of GLP-1s? Thank you.

Brian Tyler: Well, I think as, we think about GLP-1s, obviously, four quarters ago was a big growth quarter. We’re going to start to lap that. I think my characterization is there will continue to be growth. That growth may or may not be linear depending on product launches, uptakes, how commercial, government, other payers adopt policies to manage these products. So I think it’s going to be growth. It’s going to be slowed compared to what it has been historically. And it’s probably going to be a little bit lumpier than, we would typically expect just because of the size of the class.

Britt Vitalone: And I would just remind you that while the growth has been robust and we do expect the rate of growth to moderate as we go to future quarters beginning in the fourth quarter. We did increase the guide for the operating profit for the segment. So the momentum in that segment is really good. Prior authorizations in general, GLP-1s specifically, but also seeing good growth across other access and affordability solutions within the segment.

Brian Tyler: Well, thank you again, everyone, for joining our call. We appreciate, as always, the great questions. I want to thank you, Cynthia, for facilitating the call. And maybe just a concluding comment. McKesson continues to make really meaningful progress in advancing our strategy and our mission. I couldn’t be more pleased with the consistent and solid performance we’re delivering. And we remain confident in our ability to continue to deliver sustainable long-term growth. I want to make sure I acknowledge the contribution of the McKesson employees across really all our teams, all of our business. It is one team executing this enterprise strategy and I’m proud of what we’ve been able to achieve as a team. And I look forward to sharing more updates and more of our progress with you next quarter. Thanks again, everybody. I hope everyone has a terrific evening.

Operator: Thank you for joining today’s conference call. You may now disconnect.

Brian Tyler: And more of our progress with you next quarter. Thanks again, everyone.

Operator: Thank you for joining.

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