McKesson Corporation (MCK) Earnings Call Transcript & Summary

Good morning, and welcome to day 2 of JPMorgan's Virtual Healthcare Conference. It is with great pleasure this morning I have with me McKesson. With me from McKesson is CEO, Brian Tyler; as well as CFO, Britt Vitalone. We -- Brian will run through some slides, and then we will come back and do a quick Q&A. So Brian, let me pass it off to you.

Thank you, Lisa, and good morning, and welcome, everyone. I suppose it's not too late to say happy new year. It's great to be with you this morning even if it is just virtually. I certainly hope today finds you, your families and your communities healthy and safe. Before I get into the presentation, I want to pause and remind everyone that I might make forward-looking statements and discuss non-GAAP measures. Here on Slide 2 is our full list of disclosures. And for more information, you can always go to our Investors section of the McKesson website. You all know, health care is a large, growing, dynamic and really always evolving industry. Certainly, the last few years have reiterated that. At McKesson, I think when people first think of McKesson, they think of our pharmaceutical and our medical distribution businesses, which are great, strong, well-positioned and core businesses for us. But I think the heart of McKesson is really our purpose and our ability to innovate to help address and solve these health care-related challenges. I think it's been true for our 188-year history, and it's never been more true than it is today. I hope you had a chance to be with us in our Investor Day last month, in December. I started that by reflecting a little bit back to the beginning of our fiscal year 2019 when we had just announced a multi-year strategic initiative. At that time, 3 years ago, the industry was really just coming to the end of a very unusual period of declining financial performance, including declining operating profit. And so we weren't satisfied with that and we launched this initiative. And at its core was a cost and efficiency plan. And we delivered on that plan. But also embedded in there, very important was a plan to drive innovation to help improve patient care, particularly in the areas where we felt like we had differentiated assets and a right to win. So we really got the team focused on executing against these plans, plans to increase efficiency, to accelerate our execution as a company with the ultimate goal, obviously, of improving our long-term performance. We also wanted to address the balance sheet and improve our capital structure, and we've done that. And we were very cognizant at the time that there were some key areas of uncertainty in our business that we needed to resolve. One of the areas of uncertainty obviously was opioid litigation. We've been in many years of complicated discussions and negotiations with State Attorney Generals and others about a settlement framework. And we've made significant progress towards a broad resolution of these governmental opioid-related claims. Look, we're very encouraged. The proposed settlement framework, we think, will do 2 very significant things. It's going to really let us just continue to intensify the focus on our business. It will also deliver very meaningful relief to the affected communities and many families. Let me turn now to Slide 5. So we've evolved over the past couple of years this strategic growth initiative into really a very clear enterprise strategy centered around a set of very focused priorities. We have a -- first pillar is our focus on our people and our culture. The second is to drive sustainable growth in our core medical and pharmaceutical distribution businesses. The third is to streamline the portfolio, that included things like the split off of Change Healthcare and our strategic intent to fully exit the European region. And that allows us to redeploy and redouble down our efforts and focus in our 2 growth areas, which we think are to expand oncology and to leverage our biopharma ecosystem of solutions. Our progress since the launch of these priorities has really been outstanding, and I believe our clear strategy is working. Of course, it's not all easy. I mean creating and building and innovating is hard work. It's not -- doesn't happen overnight. But I think you'll see today in our progress and our confidence in our future is really thanks to the discipline and the strong execution across the enterprise. We've really pushed ourselves to be brutally honest about the investments that we need to make to support our growth and the investments, candidly, we shouldn't make because those are both important decisions in driving long-term sustainable growth for our company. If you turn now to Slide 6, I wanted to spend a few minutes on each of our priorities. And I'll start with our first priority, which is our focus on our people and our culture. I really couldn't be more proud of the team we have here. We have an outstanding team, and everything we do starts by thinking about our talent, from our frontline talent to our mid-level managers and certainly our leaders and our executive team. We've built a strong and aligned team with capabilities that will enable us to succeed in the years ahead. And we've made investments into our teams and investments in team development because we truly do believe that talent can be differentiating. Our strong focus here on the idea that people matter is centered in a cultural foundation, and it really starts with our purpose: advancing health outcomes for all. This is really what centers and anchors our daily actions around being an impact-driven organization that touches and impacts virtually every aspect of health. It includes our vision certainly to improve care in every setting 1 product, 1 partner, 1 patient at a time. And of course, our culture is anchored in our ICARE values. It's been with us for over 2 decades: integrity; inclusion; customer-first mindset; accountability to our customers, to our patients, to each other; respect; and excellence. These cultural elements are really, in my view, the catalyst or the driver for the positive change that we've been making. It's really helping us transform into a stronger business. It's allowing us to move more confidently with better alignment, more speed and more focus. Of course, as a company, we continue to be deeply committed to diversity, equity and inclusion, sometimes call it DEI, because we really do believe that creating a more diverse and inclusive workplace is going to make McKesson more productive, more efficient, more creative, more innovative and stronger as a business. And really, we embed this idea into what I call the cornerstone of our best talent strategy. We also believe in our communities where we have worked this past year to support our employees directly, and we've supported the communities that they live and work in directly. In FY '22, we also set our first public ESG-related commitments and we made public statements to address our role in mitigating climate change across our value chains. Our efforts in this area included setting and adopting Science Based Targets that will focus on improving energy efficiency, increasing our use of renewable energy sources and engaging with many, many customers and suppliers to help reduce our overall scope of emissions. Let's turn now to Slide # 8 and this is our -- really our second company priority, which is to drive sustainable growth in our core. And we define our core as our core distribution operations in medical, surgical distribution and pharmaceutical distribution. I think, here, our operational excellence and our ability to leverage our scale with global suppliers is one of the many reasons why McKesson continues to be the partner of choice for hospitals, health systems, community providers of all types and pharmacies of all sizes. We have a vast distribution network, a vast set of assets and capabilities, which has really been a critical and a foundational part of our long history as a company. We're very focused in this area in capturing efficiencies, optimizing margins, being very disciplined in the way we go to market, driving adjusted operating profit and free cash flow growth. We want to build off of our large scale and our deep expertise, which will enable us to extend our reach into new channels and to new product categories. And I think there are a lot of great examples of this. You can see some of the stats on this slide. We've done a great job evolving and developing a really significant lab business. We have a strong private label program. But there's probably been no better example of what we can do with these kind of assets than the role we played as the centralized distributor of vaccine and kitting for the U.S. government. I think it's a strong example of how we can take these assets and use them quickly to solve the most pressing health care priorities and issues in front of us. Slide 9, our third company priority: streamlining the portfolio. And this is really about unlocking innovation and speed through improved focus. It's not about running away from anything, it's running to our strategy. We want to work smarter and we want to double down on our areas of strength. So we're focusing our resources and our investments on the highest value opportunities to accelerate our growth. Now some of the focus has been things you would expect, on internal organization and process. And that supported more than $400 million of gross savings over this time period. But some of this improving focus is in more structural. In fiscal 2020, we completed the split-off of Change Healthcare in a very tax-efficient way for our shareholders. And then earlier this year, we announced our strategic intent to fully exit the European region. We announced at that time we had a pending agreement to divest 8 countries. We followed on with the U.K. Our most recent announcement was to sell our business in Austria. And lastly, the progress that we've made to transform our company enables us to invest and accelerate our 2 strategic growth areas, and that's oncology and biopharma services. We refer to these as ecosystems because, as you'll see in a moment, there are many component parts, each of which we think is self-reinforcing and additive to the other. We have the scale, the reach and the established operational excellence, which we think gives us the right to win in these spaces. And we believe our solutions solve long-standing complicated problems in ways that bring more speed, more impact, more efficiency to stakeholders and ultimately better outcomes to patients. So when you look at Slide 11 and you're thinking about our oncology ecosystem, I think -- I hope you look at this and reflect on how intentional it's been. We've built or acquired foundational assets in an attractive space. And then we've created these interconnected solutions that solve many of the market's unmet needs. And as we think of the portfolio today, what started many, many years ago as really a distribution play has evolved into a very broad, multifaceted oncology business or oncology ecosystem. On Slide 12, I think you could say the same thing is true in our biopharma services business. Over the years, we acquired and we built assets like RelayHealth and CoverMyMeds and RxCrossroads, and we put them together fairly recently. We brought the businesses together into a segment because the value proposition of the whole is really greater than the parts. By using our connectivity to physicians and pharmacies and the automation and the technology in our CoverMyMeds business, we're able to create new solutions. And that's what I mean when I say these businesses are reinforcing and additive to each other. So together, we have the capability to help biopharma with many of the commercialization challenges that they face. Which brings us to Slide 13, why is it so important to McKesson? We have a long track record of value creation in both oncology and biopharma. And as we shared at our Investor Day in December, these are both large and growing markets that have significant unmet needs and opportunities for us. And with this unmatched portfolio of assets, which we think gives a really differentiated value proposition against key stakeholders, be it biopharma services or providers, that as we bring these assets together and continue to invest and grow these ecosystems, it's really going to support our long-term sustainable growth as a company. So with that in mind, I want to hand things over to Britt, who's going to review our shareholder value creation and a glimpse at our FY '22 outlook. I appreciate everybody's time. Lisa, thank you again for hosting us. And after Britt is done, we'll look forward to the Q&A.

Well, thank you, Brian. And I'm going to just close with a few comments here. And I'm going to start on Slide 14. As we continue to successfully execute against our strategies, a key principle for how we run the business is our framework for delivering shareholder value. The framework combines 3 key elements that generate sustainable adjusted EPS growth: organic growth plus operating leverage, plus capital allocation. We start with a focus on delivering revenue growth at or above market in each operating segment, where our consolidated revenues have grown at a compound annual growth rate of 7% since fiscal '19. We convert this revenue into solid gross margins through disciplined margin tactics, portfolio management, cost discipline and strategic investments in higher growth. Our ability to generate consistent, stable cash flow, combined with the strength of our balance sheet, provides us with the financial flexibility to deploy capital in a disciplined manner, focused on higher growth and margin strategies. This framework results in sustainable adjusted EPS growth and increasing shareholder returns. Turning now to Slide 15. Our focused and disciplined execution has translated into accelerated adjusted operating profit growth. This improved operating performance combined with effective capital deployment, including accretive portfolio decisions such as the exit of Change Healthcare that Brian mentioned earlier, has led to higher adjusted earnings per share growth. These results reflect the fundamentals of our business and the strong execution of our strategy. We continue to focus on being good stewards of capital. We expect that the strength of our operations and our working capital efficiency will deliver approximately $15 billion in free cash flow over the period from fiscal '19 through fiscal 2022. And we expect to have returned approximately 50% of this free cash flow to our shareholders through dividends and share repurchases. Turning now to Slide 16. We take a disciplined approach to capital allocation, and we strategically approach our capital allocation in 3 broad categories. The first is growth investments. We prioritize growth by investing internally and through M&A. And from an M&A standpoint, we consider both tactical and bolt-on acquisitions. These are focused on accelerating our strategies and adding scale, speed and capability. The second piece of the framework is returning capital to shareholders, and we do this through a combination of a growing dividend and through share repurchases. Now as a reminder, in December, our Board of Directors approved a new $4 billion share repurchase authorization. And finally, the third piece is the maintenance of a strong balance sheet. Turning now to Slide 17. We're not providing an update to our fiscal 2022 outlook today. However, I would like to remind everyone of what we said back in December at our Investor Day: our fiscal 2022 adjusted earnings per share outlook is for $22.35 to $22.95. And this represents a strong year with midpoint growth of 32% over fiscal 2021. A couple of other comments. We continue to serve as the centralized distributor of the Moderna and the Johnson & Johnson COVID vaccines for the U.S. government. Our contract with the CDC runs through January 2022, and an option has been extended to July of 2022. And as a reminder, our fiscal '22 guidance for these programs will continue to be based on the most current vaccine distribution schedules provided by the U.S. government and aligns with the ordering outlook provided by the U.S. government's vaccine distribution program. And finally, an update on Europe. We remain committed to fully exit the European region. The progress to exit Europe remains on track. As Brian noted, we've entered into agreements to sell 10 of the 12 countries and we recently announced an agreement to exit Austria. As a reminder, Norway and Denmark remain the only countries that we have not entered into an agreement to sell. Turning to Slide 18. We're excited about the future growth prospects and we're in a new phase of growth. We're transitioning to a diversified healthcare services company from a traditional distribution company. We will invest in higher growth and margin ecosystems. And we're focused on sustainable profit growth and shareholder value creation. We've implemented a transformational strategy, we've delivered operating execution and we've strengthened the balance sheet, all leading to increasing levels of earnings growth and higher returns. We're optimistic about the future, and we believe the investment thesis in McKesson is compelling. And with that, I'll turn it back over to you, Lisa, for Q&A.

Great. Thanks so much, Britt and Brian, for all your comments. Before we get into talking about strategy and some other things, I just really wanted to start with 2 areas. One, one of your distribution competitors that you shift more towards diversified health care services, maybe they won't be a competitor in the future. But they talked yesterday really about inflationary issues, freight issues. And the first question would just be, I know that it's primarily on the medical supply side of the business, but you also have a medical supply business. Can you maybe just help investors understand how your business is different, number one? And number two, if you are seeing any of those pressures that they called out yesterday.

Britt, you want to jump on this?

Yes. Sure. I'll start. Our medical business is a very diversified portfolio of businesses. We've talked about this in prior quarters that we do see some of the cost challenges that the market sees. However, we've been very successful in being able to pass these cost increases on in an efficient manner. We did talk on our last earnings call that from a labor perspective that we do expect to see some headwinds in the second half of our fiscal year of roughly $0.10 to $0.20 across our U.S. distribution businesses. So not only our medical business, but our pharmaceutical business, and that's included in our guide. We don't manufacture products ourselves. We have strong relationships across dozens and dozens of manufacturers throughout the world. And these relationships have really allowed us to continue to provide stability of supply, low cost for our customers and really manage through some of the challenges that the market has seen.

Great. And then the other thing that stood out to me is that for -- you did reiterate the guidance that you had put out at the Analyst Day in December. But we have continued to see an uptick in vaccines in the marketplace. I guess really just 2 questions there. Is it that you already had the foresight back in December as far as what we're going to see with vaccines? We just had our conversation with CVS, whom I know is a partner to you, where they talked about in the last couple of weeks of December that they really saw an uptick in utilization of vaccines in the U.S. So I'm just curious if you saw something similar on your side? And then, secondly, you talked about the relationship with the government being extended to July of 2022. What happens beyond that? Is it kind of every 6 months from there that we'll hear an update as to whether it needs to be extended?

Well, maybe I'll -- Brian, if you want, I'll just start and just clear out the outlook. And then I'll let you hit the rest. We did provide an update to our vaccine program economics at Investor Day and that included some additional components that were approved by the CDC. So from that perspective, we remain consistent in providing an update to our economics within our guidance based on what we receive from the CDC. Brian, I'll let you cover the other components.

Yes. Look, that's right. That's the point I was going to make. And Lisa, it's obviously a very dynamic environment. It continues to be very dynamic with Omicron out there. So we'll continue to track it. You made a comment to me in the open that if you don't know someone with Omicron, you don't have friends now. It's very dynamic. It's very difficult to forecast. We really anchor in the guidance that we get from the CDC and the schedules that they provide to us. And in terms of how this will continue to unfold, what we say is we've built a terrific infrastructure. We've executed incredibly well in this vaccine and kitting distribution program, and we'll be prepared to do it for as long as the country needs us to do it.

Great. One just point of clarification. You talked about the sale of the European assets, and Norway and Denmark are the only 2 that are still left out there. But I think you talked at your Analyst Day that you would fill in the sale of the assets with perhaps some type of capital deployment. Can you just remind people of what you said and how we should think about that?

Yes. I appreciate that, Lisa. So we do expect that when these assets do close, and certainly those closing dates we have not announced those specifically, but when they do close, that the proceeds that we receive from that will be used for capital deployment. Again, we have a very balanced approach to capital deployment, and we would expect that those proceeds will be put into place in a very effective manner, including share repurchases. And again, as a reminder, our Board did approve a new authorization in December. So we expect that the proceeds from the European transactions, when they actually do close, will be effectively utilized through capital deployment, including share repurchases. And we expect that there will be no dilution as a result of that.

Great. Brian, you started your comments around being a diversified health care services company and shifting a little bit away from drug distribution. It will be still a core part of your business. But going back to your Analyst Day, you spent a lot of time talking about your life sciences and biopharma services. What are you most excited about, one, over the next 5 years? And two, maybe this is where we bring Britt into the conversation, but how big of a component of your earnings can these be in the next few years?

Yes. Thank you. Well, Lisa, we're -- in terms of what's exciting, we've been talking now for, it's actually years now, not quarters about what we felt was growing momentum in the business. And I think for me, that all really anchors in that focused strategy we talked about. So I'm excited to see the culture and the energy in the company. I'm excited to see our talent strategies come to fruition. I feel really great about our core distribution businesses. They're in good markets, solid markets. We have great operations. We continue to find ways to improve those businesses. And they generate good cash flows, which allow us the flexibility to invest and to grow these new growth areas that we're really excited about. And this is an area we've been operating in both of these, oncology and biopharma services, for a very long time. So we know these markets. We know the growth prospects. We know where we have differentiation and where we can pivot to develop value propositions that are meaningful and impactful for the company. So what excites me is the focus on the business, the plan that we've got, the growth prospects that we see in front of us and the team that's 76,000-plus strong that's rowing the boat together to execute these strategies.

So Britt, how about on your side?

Sure, sure, Lisa. We talked at our Investor Day about the growth that we've seen in each of our operating segments over the last 3 to 4 years. And we expect that we will see that continued -- that level of continued growth over the next 3 to 4 years. Certainly, in oncology and biopharma services, these represent higher growth and higher-margin segments for us, and we would expect that they would continue to grow at those higher rates. When you think about oncology, one of the things we talked about at our Investor Day is that the therapies and the drugs that are going through our oncology ecosystem are growing at a long-term growth rate of about 14%. And when we talk about biopharma services, the areas that we're investing in that will continue to have success in over the long term are growing at a long-term compound annual growth rate of about 15%. So you've got higher growth areas for us. You've got higher margin areas for us where you have differentiation. And we would expect that we can continue to grow operating profit at or above the level that we have been in these 2 particular areas going forward.

And as we think about your specialty business, you've done a great job, US Oncology. You think about opportunities on biosimilars within the oncology drugs. And can you maybe just talk about where you see the opportunities for biosimilars in oncology? And then secondly, maybe talk about the profitability there, right? So you talked about 14% growth. Clearly, a branded drug is going to be more expensive. So could it have some impact on the top line, but potentially have a much better margin profile? How do we think about that?

So biosimilars, in general, we think are a really good development. About 31 of them have been approved. I think 21 of them have been launched. So it's still very early in the grand scheme of how we think this market will evolve and play out, but we're very excited about it. And we think our presence in the community practices, our presence with US Oncology are going to be good channels for us and that the evolution of biosimilars will support those businesses and support their top and bottom line growth. The profile of biosimilars, it sort of matters what channel they go through, hospital, pharmacy or community provider, because it really dictates how much additional service we can wrap around these biosimilars. And ultimately, depending on how many come to market, is it a 1 biosimilar or 6 competitors launch and what channel does it go will determine kind of where it comes in the margin spectrum somewhere between brand and generics.

As we think about shifts in sites of care, right, so the shift away from hospitals towards clinics, physician offices, ambulatory surgery centers, I think of McKesson as being well positioned around that. What are your thoughts on the current competitive landscape when we think about distribution? And then, secondly, you've also had a great opportunity when we think about lab and testing, right, throughout the pandemic. So where do we -- where does McKesson fit going forward when we think about those 2 sides of the business? One, there's continued shift in care and is there incremental services you could provide on the medical supply side. And how do we think about labs?

Sure. I'll start, and Britt can add on, if he'd like. Look, first, we really like the medical business. We pivoted this business about 10 years ago to really be focused on the community setting -- or the community settings. I mean if that 10 -- or about a decade ago, we were largely a physician office and long-term care. And I think as we've evolved with the market and this trend of care moving out into the communities, we followed that to urgent care clinics, to surgery centers, to all these additional places you can consume health care now. And I think we've grown there for our channels. And then we've grown our product portfolio, too. We've expanded from just kind of commodity, medical supplies you find in the physician office to pharmaceuticals, specialty pharmaceuticals, private brand. We got into lab several years ago because we saw the opportunity there. Now we didn't -- COVID wasn't on our road map then. But certainly, the capabilities that we had, the relationships with manufacturers, our channel reach, our ability to get the product where it needs to be quickly, it turned to be a really big asset for us in the last few years and we've certainly capitalized on it well. And I think that's what you can continue to expect. You can continue to expect us to follow the patients wherever they're going to present in the community and to continue to expand our capabilities to deliver whatever those needs are.

You touched a little bit on PPE. And I remember years ago you talking about private label and sourcing products. Can you talk about where you are on that journey around private label on the PP&E side?

You want to take it, Britt?

I'll just start, Brian. PPE has been a part of our business -- in the medical business for as long as I can remember, and it will continue to be that. Going back to your first question, we have very strong relationships across a number of manufacturers, both national brand manufacturers and those that support our private brands. And we think that the combination of national and private brands is very beneficial for our customers as well. So whether it's PPE or another product category, we have very strong relationships. We manage both national and private brands for the benefit of our customers, and we think that we're well positioned to keep doing that.

Okay. Great. And then just kind of -- I know I'm jumping around a lot, but as I think about the different portfolios that you have, you have a unique portfolio of biopharma services. And we touched a little bit on that, but within that is the Prescription Technology Solutions. So things like CoverMyMeds, RxCrossroads, RelayHealth. When I think about McKesson, they're really uniquely positioned to deliver a range of solutions to really multiple stakeholders. Can you talk about the broader market opportunity and maybe even the competitive backdrop? Like who are you competing with when we think about some of these businesses?

Well, when we think about the CoverMyMeds business or the Prescription Technologies segment, we'll start with why we put these together. I mean we really see we've got scaled businesses that are interfacing with 50,000-plus pharmacies right into their workflow and 750,000 providers right into their workflow. And then you think about the capabilities that we have to automate some of that workflow, to push messaging, fundamentally this marketplace is really about access to medicines. It's about affordability of those medicines. And that's where we have great strength today. And then we think, ultimately, it can be about adherence and it could be about leveraging the data for better outcomes. And so that's kind of on the future growth of spectrum. In terms of who we compete with, I mean, honestly, it's a pretty fragmented landscape. I mean it would be a long list of names that I would have to throw up there. And some of them try to compete with a more broad value proposition like we have, although I would say without the network connectivity and the connection into the providers and the pharmacies that we have, and others tend to try to be point solutions. And we really think that there is much more value in adding a point solution to this ecosystem that we have and finding ways to leverage the network connectivity and the automation tools we already have to solve these bigger problems.

Yes. Brian, we talked earlier about the exit from Europe, right? But you're still in Canada. You've been a big player in Canada for a number of years. How do we think about Canada as part of the portfolio going forward? And strategically, does it fit with McKesson, number one? And number two, how do we think about the growth prospects in Canada longer term?

Yes. Let me start with the strategy and Britt can talk about the numbers. So we view Canada as very different than Europe. It's a business that we've been in for a long time. We know very well. We have terrific scale in distribution. We've just expanded that with a new partnership with one of the larger players in Canada. We've got terrific banners that support banner pharmacies and we've obviously got the Rexall pharmacy. So there's really no change in our Canadian strategy. It's really a shift to North America, I guess, a focus on North America, you could say. We continue to think that there's growth prospects there and that, that business is really well positioned and a really important player in the sense of the health care in all of Canada.

And we've seen good growth in Canada over the last few years. It's been really a staple for the business for many, many, many years. And we expect that, that kind of growth will continue over the coming years as we laid out in our Investor Day. And recently last year, we signed a large customer, which really just solidified the distribution excellence and scale that we have in Canada.

In our last couple of minutes here, the opioid proposed good settlement is something that we've all been looking forward to for some period of time. The three distributors announced the deadline for political subdivisions to join the proposed settlement is extended now until January 26 with New Mexico signing on. As of now, there's just 6 states that have not joined. Is there any update? And maybe help us understand that can you move forward without those 6 states signing on?

Well, we did extend the deadline. And we've been very pleased to have additional states sign on from that deal since we announced that extension of that deadline. And we're continuing to work through the process with the subdivisions and the municipalities right now. The current deadline is now January 26, I believe. And so look, at the conclusion of that period we've got 30 days to assess who's come in. We'll look at many different metrics to evaluate that, and then we'll make the best decision in terms of what we think is a good outcome for our shareholders.

Right. But can you move forward without the other states? Or you have to get everybody on board and maybe push out the time line? Like just so I think that will...

No. I think what we've really kind of said from the outset here is that we're trying to ring-fence the risk. We're trying to resolve as much as we can. And so it's been a long journey. It's been a lot of time. We're really pleased with where we're at right now. We're very optimistic that the settlement framework will allow us to accomplish our goals. And right now, we're just going to have to let the time line run.

And Britt, do we know will it be tax deductible?

Yes. We have recorded some disclosures around that in our 10-K and 10-Q. So we do expect that there will be some level of tax deductibility, and that's reflected in our financial statements.

Okay. Great. And then we've got 2.5 minutes left here, Brian. I'd love to end all of our conferences this way for my large-cap companies. But what do you think that investors don't appreciate about McKesson today that they'll appreciate 12 months from now?

I think that they will just continue to appreciate the great work that our 76,000-plus teammates do every day and the outcomes that they deliver. I think people will appreciate we've got good, solid core fundamental distribution businesses, that we've got really exciting growth prospects in a couple of big growing markets where we've got differentiated capabilities. We've got the right to win. And I think people will just reflect on the continuing growing momentum in the company.

Great. We'll leave it at that. Thank you so much to both of you for presenting today. If you have any questions, by all means, feel free to reach out to me or anyone on my team or the IR team at McKesson. Thank you so much, Britt and Brian. I appreciate it.

Thank you.

Thank you, Lisa. Have a great day, everyone.