McKesson at UBS Global Healthcare: Strategic Transformation Insights

On Monday, 10 November 2025, McKesson Corporation (NYSE:MCK) presented its strategic vision at the UBS Global Healthcare Conference 2025. The company highlighted its ongoing business transformation and operational excellence while addressing potential challenges in drug pricing and market dynamics. McKesson's focus remains on leveraging technology and innovation to enhance its services and expand its specialty business.

Key Takeaways

• McKesson's resegmentation includes North American Pharmaceutical, Specialty Oncology, and Rx Technology Solutions.
• The company anticipates adjusted EPS growth of 16%-18%, excluding last year's McKesson Ventures gains.
• Investment in automation and technology is driving significant operational improvements.
• McKesson is expanding in oncology with the addition of Florida Cancer Specialists.
• The company is focusing on high-innovation areas like Retina and ophthalmology.

Financial Results

McKesson reported a strong financial performance, guided by an adjusted EPS of $38.35-$38.85, representing 16%-18% growth. Excluding gains from McKesson Ventures in the previous year, the growth stands at 18%-20%.

• Operating expense leverage improved by over 1,000 basis points over five years.
• Full-year tax rate is estimated at 18%-19%, with a higher third-quarter rate of 23%-25% due to business mix and timing.
• North American Pharmaceutical business saw consistent utilization growth.
• Specialty Oncology achieved a 3% operating margin with growth beyond drug distribution.

Operational Updates

McKesson is committed to operational excellence through investments in technology and automation.

• A new distribution center in Ohio, 90% automated, enhances efficiency and accuracy.
• The Specialty Oncology platform now includes over 3,350 providers across 27 states.
• Rx Technology Solutions is receiving increased investment in the latter half of the year.
• McKesson is enhancing its AI and automation capabilities, with a leadership meeting planned for top executives.
• Direct-to-consumer distribution remains a small part of the business but is poised for expansion.

Future Outlook

McKesson is poised for further growth through strategic initiatives and market opportunities.

• Operational improvements beyond current achievements are anticipated.
• Expansion in high-innovation areas such as Retina and ophthalmology is a priority.
• The GLP-1 market may see increased coverage and volume with lower prices.
• Keytruda's MFP pricing is set for 2029, aligning with strategic planning.

Q&A Highlights

The conference call addressed several key topics affecting McKesson's operations and strategy.

• Generic pricing remains stable and competitive.
• McKesson expects no direct impact from Trump RX and GLP-1 initiatives, maintaining fair value for services.
• Specialty expansion focuses on therapeutic areas with high innovation and drug spend.
• Providers are actively participating in value-based care models.
• Biosimilars offer better economics through the US Oncology channel.

For a complete understanding of McKesson's strategic direction and performance, readers are encouraged to refer to the full transcript.

Full transcript - UBS Global Healthcare Conference 2025:

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Morning, everybody. Thank you for coming to the UBS Healthcare Conference. I'm Kevin Caliendo, UBS Healthcare IT Distribution Analyst, and we are really, really proud and happy to have Britt Vitalone, who is the Executive Vice President and Chief Financial Officer of McKesson. Britt, thanks so much for coming today.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Thanks for having me.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: It's been a great few years. It's been a great, more than a few years, but it's been an especially great few years. Maybe take us through a little bit. I want to start with North American Pharmaceutical because you've had this business for a long time. You broke it out this year. You separated the specialty business from North American Pharma, and I was a little bit surprised to see the margins of North American Pharma standalone were stronger than I thought they might be ex the oncology or ex the specialty business. I know you rolled Canada into that, but are they, if we go back and look, what's changed in that business? What's made it stronger for you? In the past, we still track the generic stuff and generic pricing and generic mix and everything, and that doesn't seem to be changing. So something else is improving.

You maybe just talk a little bit about that.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah, I'm happy to. Maybe I'll just start at a little bit higher level. What we've been doing over the last several years, and we've had a number of what I would say transformations within the portfolio, which I think is really important. It's kind of got us to where we are today. The most recent Investor Day, what we did is we resegmented our business first to help provide a little bit more clarity on where our strategies are going forward. That includes our North American Pharmaceutical business, which is our US Pharma business, plus our Canadian distribution business. Separating out specialty oncology, it's an area that we've made a lot of investment in over really the last 15 years. Our US oncology business, now the addition of Prism and building out a new platform around vision, specifically retina ophthalmology.

Our third piece remains unchanged. It is the segment which we call our Arc Technology Solutions business, which is focused on our biopharma services capabilities. It is important to kind of backtrack because what we have done over the last few years is focus in on our strategy, where we have a right to win, where we can win, and then focusing on how we do win. That is leveraging what we believe are differentiated capabilities that we have, both in oncology, multispecialty, and in biopharma services. In our North American Pharmaceutical business that you asked about specifically, I think there are a number of factors that are really delivering this here. First of all, we have seen solid and consistent utilization over the last several years now. It has been a consistent growth.

I think the continued demographics and demographic trends and continued innovation in drug development, drug distribution are all playing a part of that. We have continued to invest in this business and in automation and technology and capabilities that are driving operating expense leverage. I think just the breadth of services that we have, the breadth of channels that we support, our sourcing capabilities, both on the generic side as well as on the branded and specialty side, all of those are leading to a more scaled, efficient, and effective North American Pharmaceutical business. We think the continued growth of specialty and specialty drugs is also playing into that. Again, that's being leveraged against the broad platform, the efficient platform that we have.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: To that end, you're saying utilization is stronger. Is there a change in mix in any way, shape, or form in the North American business? I don't want to get into specialty, but is there a mix happening there that's benefiting you, or is it just the fact that you're able to leverage the OPEX line through automation, through the investments that you made? Is that what's driving the higher AOI margins?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: I think there's a couple of things. I think there is a mix that continues to shift more to specialty drugs and specialty distribution. Generics are an important part of the basket that we provide as a full-line wholesaler, but the impact that generics have today is less than it was 10 years ago. I mean, there's fewer launches, although there are still launches that happen, and then the growth of specialty. I think specialty has become a bigger part of the bucket. The scaled business that we have and the footprint that we have allows us to be more efficient, combined with the investments that we're making in automation and into our distribution network. I think all of that is factoring into higher margins.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Specialty drugs five years ago, six years ago, eight years ago weren't necessarily moneymakers for you, right, on the core distribution side. They were treated similarly to brand. What's changed there? Or tell me I'm wrong, but that was always the impression I had. Listen, everything was built around getting generic share. Now it sounds like specialty is a way to make money in the core North American distribution business. Is that?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: This started many, many years ago. We were very focused on making sure that we earned a fair value for the services we provide in each category of services. Clearly in generics, there is a buy spread opportunity there, and we use our capabilities in sourcing. We use the scale that we have to drive a buy sell spread that is beneficial for our customers as well as to the company. We have been very focused with branded products, specialty products, now biosimilar products to make sure that we are paid a fair value for the services that we provide. Regardless of price, regardless of the product, whatever is needed by the manufacturer, we negotiate with them to make sure that whatever services we provide, there is an applicable value associated with that.

There's greater focus on each individual category and each individual product to make sure that that fair value is reflected.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: That's with the manufacturer, not necessarily with your pharmacy partners in this business, right? You're getting better economics on the manufacturers.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: We're getting fair value from manufacturers. That's being reflected in the prices that our customers pay us. I think it's just the focus of making sure that there's fair value across all categories has been important, and it's something that we started many, many years ago.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: I think we don't appreciate the automation and the costs. If you look at McKesson and take the gross profit line as you report it and the operating income line as you report it, it's been a fantastic rise in terms of the margin there, just looking at those two line items as opposed to the revenue number that you defined. I'm assuming that's mostly because of automation, and that's because you become more efficient. It's hard for us to see that in the outside world. Can you talk a little bit about it, and where can it go? I mean, are we at a point where OPEX can stay flat even if you're growing 3%, 4%? How much of it's tied to the actual costs? Is there more improvements that you can make maybe through automation, AI, whatever it might be?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah, so we've talked about this for as long as I've been with the company. The term that we've used is operational excellence. Operational excellence not only means delivering the product at the right time to the right customer at the right price and doing that in a very efficient manner. It also means doing it in an operationally cost-effective manner. Four years ago at Investor Day in 2021, I talked about some of the improvements that we were seeing in our operating expense leverage. We measured that as operating expenses as a percentage of gross profit. We were seeing some of the benefits of the focus that we were making at that point in time. Fast forward to this past Investor Day, we've continued to implement new technologies, new automation. We just opened a DC in Ohio that is now 90% automated. Now, that's tremendous efficiency.

It's tremendous accuracy, and our customers feel the benefit of that as well. Those types of investments, improved processes, improved efficiencies, improved processes in the back office, all of that is continuing to drive operating expense leverage. At Investor Day, I talked about the fact that over the last five years, our operating expense leverage has improved over 1,000 basis points. It's not something that we look at each quarter. It's year to year to year. Are we making the right improvements to be more efficient, more accurate? Those benefits will flow through to both our partners in the manufacturing world as well as our customers. I'm really proud of that focus. I think it delivers better value to our customers, and I think that we can continue to do that.

The early stages of AI, we've been investing in this now for the last 18 months. The pace of AI innovation inside McKesson is picking up. More and more people are becoming aware of the capabilities, and they're now introducing it into their daily jobs. In fact, I was just, Kirk Kaminsky's here. We have a leadership meeting this week in Dallas, two days, and it's going to be focused on how do we use automation and AI in all of our processes. We're bringing together the top 150 leaders at McKesson to talk about that. It is something that we believe is going to continue to drive really good benefits for the company, for our customers, and over time, it'll deliver more efficiency.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: In five years, when we're sitting back here again, you're going to talk about another 1,000 basis points of.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: I think the opportunities are certainly there to continue to. I think we're in the very early stages. A lot of the things that we're doing today are low-hanging fruit opportunities. There's more transformative opportunities, I think, out there in front of us. Again, we've got the power of thousands of people across McKesson that are now being introduced to these capabilities. That technology mindset, I think, will pick up steam over the next several years. I'm not predicting 1,000 basis points, but we're on this journey, and I think that's going to be an important part of our story.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Got it. A couple of specific things. Understanding that specialty is so much more important than generics, but we did notice a step down a little bit in specialty generic pricing in the data that we track in September, maybe a little bit into October. Is there anything there? The first question every conference call was, what's happening with generic pricing? Should we care about the nuances month to month or over a quarter or something in terms of generic? I know you have a spread, but I'm just saying we track the spread, and it felt like the spread got a little bit tighter.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah, and specialty change. I mean, we manage the business for the long term, and obviously, we look at the same sets of data that you do. I do not really worry about a month-to-month change. I look at trends over time, and I look at the underlying trends. The pricing environment has been stable, and it has been consistent. It is competitive, but it is stable. I think month-to-month, you could see variations for a whole lot of different reasons. It could be mix-related. It could be the introduction of a new product. If you look at it on a year-to-year basis, there is good stability in the pricing environment.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Pricing's obviously been a big factor, a big headline over the last couple of months with Trump RX and everything else. Maybe it's a good transition to talk about it and what was announced on Friday with the GLP-1s and how that could impact you. Do you see any way where government gets involved in Medicaid pricing or Trump RX has a list price where prices are clearly lower than what they? Does this impact you guys in any way, shape, or form? Maybe first on the core North American pharmaceutical business, then we can talk about specialty and RXTS.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah, so we're going to continue to work with the manufacturers to be paid a fair value for the services we provide. If there's a distribution of one of these products, regardless of whether it's on Trump RX or it's going directly from the manufacturer from us to a patient, whether it's direct-to-consumer, again, where we distribute that product, we'll be paid a fair value for those services. We don't see any direct impact from the announcements that happened on Friday or similar ones that we anticipate could happen. Direct-to-consumer, as an example, has been around for more than a decade. We have plenty of capabilities that would support continued expansion of direct-to-consumer. It's pretty small today. We expect that it's going to continue to be a pretty small component of overall pharmaceutical distribution. We have a lot of capabilities to support this.

On the distribution side, within CoverMyMeds, we have Central Phil as a Service, where as a patient, we can direct your prescription to your particular pharmacy of choice or to your home. We have pharmacy capabilities with Biologics by McKesson, where we have an independent specialty pharmacy distribution arm, which can, again, support rare and oncolytic-type specialty drugs, where we can send it directly to a patient's home as well, as well as the clinical support services that go with that. We have a number of pharmacy-related capabilities through CoverMyMeds, which really, in a comprehensive way, try to integrate what's necessary with a brand manufacturer's patient portal. It could be helping with the intake, the fulfillment, and the distribution of that back to a particular patient. It's been around. It's been pretty small for a number of years.

We anticipate it'll continue to be small, but we are aligned with an array of assets that would support this going forward.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: I understand getting paid your fair value for what you do. I know you also get paid for working capital and taking on working capital, right? If the price, are you still getting that part of your fee based on what the list price is or what the price is? I do not want to say post-rebate or post-discount. I understand what I mean. If a GLP-1 is $1,000 and you are taking on $10 million worth of it, the working capital fee, or does this not matter because it is such a small piece of the fee that you are getting? I am just wondering how the working capital aspect changes, and does that in any way affect your profitability on a script?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: We're paid a fixed fee for service for the fair value for those particular products. If the cost to us to deliver that is, let's just say $5, it doesn't matter whether the cost of the drug is $1,000 or $100. We're still going to be paid a fixed fee for service based on the fair value that we provide. In terms of the working capital, again, we take on that responsibility to manage the inventory as well as the receivable. We still have to be efficient in that. Again, regardless of what the price of the drug is, we're still managing that working capital on behalf of the manufacturer and on behalf of the customer. The efficiency that we do that is going to drive a cash outcome. We're very focused on having efficient working capital.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: If I'm thinking about this same drug, lower price, lower working capital, your margin actually will look better, presumably, because you're still getting that fixed fee.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Could, could.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: I mean, I know we're talking about a small thing. Understanding how this works for you has always been a little bit complicated. Let's talk a little bit about oncology and multispecialty. At Analyst Day, you talked about some of the deals that you've done, including the addition of Florida Cancer Specialists. Is there more opportunity in oncology? It feels like the biggest assets have been scooped up by either you or your peers, but is there more opportunity there? You also said at Investor Day that you were going to start looking at other specialties. Maybe talk about what those might be because I have some questions about that.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah. So we're really pleased with the platform, starting with US Oncology, that we've built really now over the last 15 years. We now, with the addition of Florida Cancer, have a little over 3,350 providers in the network that are providing clinical services in over 27 states. There is still some opportunity in certain geographies for us to go into. I think the largest players have probably been spoken for or assigned at this point in time, but there's still opportunities for us to continue to add in certain geographies. What we're really focused on, though, is what kind of value can we provide for these providers, whether that be through drug distribution, through the GPO services that we provide.

Certainly, there's a lot of clinical data that's available for clinical practice that the providers provide, as well as upstream information for the manufacturers as they look to continue to innovate within their drug pipeline. There is the clinical trial side of this. There's a lot of clinical research being done in oncology. I think there's 41% of all new drug trials are still focused on oncology drugs. We have an opportunity there through our Sarah Cannon Research Institute joint venture to continue to provide clinical trial access, site management, clinical trial management, which will help the over 1,300 research providers today that are doing research and clinical trials within the network. We think that the opportunity with drug distribution is still good.

We think the opportunity to grow some of these other services, whether that be data, whether that be clinical trials, some clinical research capabilities, is still that next leg for us. At Investor Day, we talked about the total opportunity being about $115 billion. About $80 billion of that, we estimate, is drug distribution. That leaves a wide opportunity for us in some of these other platform-building capabilities. You mentioned other platforms that we're looking at. What we're focused on is moving in and building platforms where there is high innovation, high drug spend, and the ability for us to build a platform around that. We're not looking to just go out and buy a bunch of providers in a particular therapeutic area. There's practice management associated with that, but it's hard to manage providers.

The economics and the return on invested capital for that, we do not believe, is high. Where you can build a platform around drug distribution, GPO services, and clinical research and clinical capabilities, we believe the return is good there. We think that Retina represents that opportunity for us. There is good drug innovation. There is increasing drug spend, and there is a lot of clinical research in that area. We believe beginning to build that out is going to be another platform for us to deliver a lot of value through.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Okay. A couple of follow-ups here. Do you have all the assets that you need to provide the services to these providers that you need to have, that you just described, $115 billion? A couple of years ago, I remember there was a lot of chatter, for lack of a better term, around McKesson being interested in CRO or CRO-related assets.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: I never heard that.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: I know you only had to address it about 100 times. You did say certain pieces of CROs you were interested in. Do you feel now that you've developed those capabilities to provide all these services? At this point, does McKesson have what it needs?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: What we are interested in is where there are clinical capabilities within the areas that we've chosen to build platforms on. Going out and being a general CRO would be difficult. Strategically, where there are capabilities that support oncology or Retina or ophthalmology, that makes sense because we're building a platform around that. I think the Sarah Cannon Research Institute J.V. is a good example where we identified an opportunity for us to add capabilities around expanding clinical trial access, expanding site management. That's a good example of adding to the platform. I think there will be other opportunities for us to add some of these clinical capabilities that support the platforms that we're building around oncology, Retina, and ophthalmology.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: With these provider assets that you have, have you ever contemplated going at risk with the providers, or are you simply just comfortable with the current reimbursement model? I say that, I'm not talking necessarily about value-based care, but when you had your partnership with Optum, right? They love to be innovative. You guys love to be innovative. The first thing I thought was, "Hey, maybe there's going to be something they can do in oncology here where both sides would benefit," right? There could be. Now, I don't know that the world wants to hear you guys would be doing something like that, but have you thought about it? Is there an opportunity either in that relationship or broadly with the assets that you have to maybe benefit for some of the care providing that you do in and above just getting paid for the services?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Our providers are already doing a lot of value-based care. The oncology care model is a good example where we had a significant portion of the providers within the US Oncology Network participate and drive a significant amount of the savings. In the enhanced oncology care model, we're seeing similarly that US Oncology providers are participating at high levels and driving significant value. That's a choice that our oncology providers make to do value-based care or not. We're seeing that they're leaders in value-based care. In terms of getting more innovative, I mean, certainly we have one of the things that we talked about at Investor Day is when we have large customer relationships, how we can deepen and broaden those relationships out over time. HCA is a good example.

We started with the Sarah Cannon Research Institute joint venture, where we could build out more clinical capabilities around oncology, and that extended into a distribution partnership. Similarly, we've seen that with Walmart and with other customers where we start with a particular aspect that we have good skill and capabilities in. Over time, if it makes sense, we will broaden that relationship out. In terms of your specific question, I don't really have an answer for that today. I mean, I think we're always open to areas where we have skills and capabilities, and we have differentiation that we can build on. That's not one that we have looked at today. In the future, is that one that we could look at? I mean, possibly, but it's not where our focus is today.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: You sort of answered a question that I had when you said you have certain, when you're looking at new specialties, which you said at Analyst Day, some of the things they need to have is high drug spend. We get it in ophthalmology, we certainly get it in oncology. It's hard to understand. Are there other specialties out there that have a lot of high drug spend? The one area that I've heard private equity has been scooping up everything is sort of infusion centers, right, which would have a high amount of drug spend. I don't know that that's necessarily what you're talking about, but it feels like there's something going on in that world as well. What other specialties have that kind of spend, or can you talk maybe a little bit more broadly? What goes above and beyond ophthalmology and oncology in that space?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah. Look, we start with every year we go through a three-year process where we look at the drug pipelines in both branded area, specialty area, biosimilars, and generics. From that work, we look to see where the concentration of innovation is going to be, where the pipeline is going to be. What we see today is that oncology still has the largest spend and the largest innovation in it. We see new drugs coming to market, even biosimilar-type drugs in the vision space. That was obviously an opportunity for us. Those are the two areas that we see today that make the most sense for us to build a platform around. There is a lot of research going on in other therapies, but in terms of the drug innovation and drug spend on the market, it is not there today. Certainly could be over time.

We look at the pipeline on a regular basis. If there's a particular therapeutic area that shows promise from an innovation and drug spend perspective, that could be an area where we could build up a platform around. The two areas that we're focused on today are in the vision space as well as in oncology.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Infusion by itself as an infusion center, whatever, that's not an interesting opportunity for McKesson?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: It's not something today that we have spent a lot of time on. Again, we look at a lot of different things, and we try to assess whether there's an opportunity and whether there's a breakout from a growth perspective. I can't really say why private equity does what they do. They have a lot of capital to invest, so.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Fair enough. The 3% operating margin in the specialty in oncology and multispecialty business was a little bit lower than I was expecting it to be. For whatever reason, it doesn't matter. That's my opinion. When we break out how to think about the margin between the MSO and the GPO, I know this is something you don't necessarily want to get into a lot of detail about, but how do we think about it? How big is the GPO? Does the GPO just service McKesson oncologists? Are you outside of the 3,300 oncologists that you have and purchasing for more? How does it work? Can the MSO work without the GPO? Can the GPO work without the MSO?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: There is a lot to unpack in there. I would say that when we build out a platform, it is to build out a whole breadth of services, GPO being one of those. The GPO that we have today services thousands of multispecialty providers. Outside of the US Oncology Network, there are multispecialties that access and utilize our GPO as well. From that perspective, I think it is a scaled GPO that many benefit from inside of McKesson and outside McKesson relationships. That is maybe how I would answer that. I mean, back to your question on the margins, again, today, a lot of the platform is still driven off of drug distribution. Again, we are paid a fair value for the services that we provide for those particular drugs. Over time, we see more and more growth beyond just drug distribution, and I talked about that already.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Got it. I think one thing that we look at as we see a drug like Keytruda, which I think has been a big driver of oncology drug spend, it's a fantastic drug. It's used in a lot of different indications. I'm sure your GPO is purchasing a lot of Keytruda. What happens? Keytruda's on the IRA drug list, right? We know that. What happens when that price goes down or the biosimilar comes? Can you just sort of explain how it impacts the GPO and MSO aspect? This isn't until 2028, right, or 2029 when this is going to happen. Just mechanically, what happens to McKesson when that happens?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: You have two different things in there, so let me just parse those out. You talked about biosimilar.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Biosimilar comes and at the same time, there could be a lower IRA %.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah. Let me bifurcate those. From a biosimilar perspective, where there are drugs that go biosimilar that we provide more services to support, those that would go through the US Oncology channel as an example, where we provide more services, more GPO services, more wraparound services on the platform, our economics are going to be better than they would be for the innovator drug itself, generally speaking. Channel matters from that aspect. Biosimilars that are going to go through the retail channel, if you will, a Part D drug, where the services required by McKesson are less, our economics will be lower. They are probably better than the innovator drug themselves, but they will not be as high where we are providing more services. That is the biosimilar aspect to that. In terms of Keytruda itself, I mean, we are kind of speculating on what will happen here.

My understanding is that drug has been pushed back to 2029 for MFP pricing. What that price looks like, I couldn't speculate on that. Is that going to be the same as the particular price that ASP is reimbursed at today? I don't know the answer to that. If it is a lower MFP price, those units will be part of the overall ASP calculation, and there will be reimbursement impact from there. I also can't tell you what's going to happen to the reimbursement for providers because we fully believe, and we believe that many others see the same trend, that the most efficient and economical place to provide care is in the community. We believe that whatever changes are taking place today is not intended to impact community providers. I think we have a number of years to see what will happen.

In terms of where community providers are placed, we still think they're the most effective and the most economical.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: We have about five minutes left, and now I want to talk a little bit about prescription solutions. The announcement on Friday about GLP-1s coming to market at a lower price should not affect RxGS. It may actually help, right, if there are maybe more prescriptions depending on how it works. Do you anticipate there being any change from payers in terms of what they are interested in doing in terms of prior authorizations or any change just from a lower price? Maybe there is more prior authorization. What do you expect the impact to be on RxGS just simply from a lower GLP-1 price?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: You're going to hate this answer, but I don't know the answer to that. What I can say is that it could actually open up more coverage, and more coverage could mean more volume that goes through the system. Now, the prior authorizations are typically different, whether it's a diabetic product versus a weight loss product. There could be different restrictions on a diabetic product versus a weight loss product. The time to renew the prior authorization for a diabetic product versus a weight loss product, that time could be different, and that changes payer to payer. I think it's a little early to say what the reaction is going to be. Putting these on the Medicare platform themselves, making them available to more Medicare patients could open up more volume. I think we'll have to see how that plays out.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Has there been any change in the economics to McKesson over the last year and GLP-1s in terms of what you get paid for a prior auth or a second prior auth or anything like that? How has it worked? I know GLP-1s are not as important as they were for prescription solutions, but I'm sure they're still important. I'm just wondering how they've changed.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: It's going to depend on the manufacturer. It's going to depend on the specific product, and it's going to depend on what the manufacturer is looking to drive out of those products. Do they just want a basic initiation and submission for the prior authorization? Certainly, there's going to be economics around that. Are they looking for help with appeals or denial conversions or rejects or services to support that? Prior authorization monitoring, reporting. There's a whole host of adjacent products to support a particular product depending on what the manufacturer is looking for, depending on where it is in its lifecycle. Yes, economics will change depending on, like any other prior authorization, really, depending on where the product is in its lifecycle, what the manufacturer's needs are to support that particular drug.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Do you think there'll be any difference for you when oral solids come to the market versus injectables?

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: There could be. Again, it's going to depend on what restrictions are necessarily placed on those particular drugs, what services are going to be needed. There could be.

Kevin Caliendo, UBS Healthcare IT Distribution Analyst, UBS: Okay. I want to ask, because we only have two minutes left, but is there any messaging? We're through two quarters. I know the way the guidance has played out, it was pretty clear. Is there anything we should think about in terms of seasonality, anything to consider for the second half of the year? I know you and I talked about the step down in the pharma growth, but you said there was no change in the actual LRP. This was just adjusting for Optum and the deals. Is there anything else we should think about in the second half of the year for this year in terms of the guidance, seasonality, tax rates? I know things move around a lot.

Britt Vitalone, Executive Vice President and Chief Financial Officer, McKesson: Yeah. So we're really pleased with the performance that we've had thus far this year. If you look at our guide on adjusted EPS, $38.35-$38.85, that's 16%-18% growth. And when you exclude the McKesson Ventures gains that we had last year in the first half of the year, that really represents 18%-20% growth. That's above the long-term ranges that we provided. We're really pleased with that. To your point, there are a couple of things. In the North American pharmaceutical last year, we had the onboarding of a strategic customer in the first quarter of the year. We're obviously lapping that in the first half of this year. In the back half of the year in our Canadian business, which is now part of this segment, we had the benefit from held-for-sale accounting for Rexall and Well.ca.

We're going to be lapping that in the second half of the year. We have some investments that we're making that we talked about that are going to increase in the second half of the year in our Rx Technology Solutions business. The tax rate, as you mentioned, we've got an 18%-19% full-year tax rate. We anticipate that the third quarter will be 23%-25%. It's really related to the mix of our business and the timing of discrete items. Again, that 18%-19% is relatively in line with what we provided, slightly higher, with the third quarter being a little bit.

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