01—Abstract
Summary
Summary of the 10-K filed May 14, 2014. Cited figures are marked; the original filing is the authoritative source.
McKesson Corporation's 2014 10-K filing highlights a year of significant growth and strategic expansion, largely driven by the acquisition of Celesio AG.
The company reported a substantial increase in revenues, reaching $137.6 billiona, a 13% rise from the previous year, primarily fueled by its Distribution Solutions segment. This segment, which constitutes the vast majority of McKesson's revenue, saw growth from increased drug utilization, price increases, and the strategic integration of acquired businesses. The company also demonstrated a focus on operational efficiency and technology development within its two core segments: Distribution Solutions and Technology Solutions.
While the Distribution Solutions segment continued to dominate revenue, the Technology Solutions segment also showed growth, driven by acquisitions and increased claims processing volume. McKesson continues to navigate a complex and evolving healthcare landscape, facing competition and regulatory scrutiny, but the acquisition of Celesio positions it for expanded global reach and a strengthened market position.
02—Key points
Key Highlights
- Revenues increased by 13% to $137.6 billion, primarily driven by the Distribution Solutions segment.
- Completed the acquisition of Celesio AG for $4.5 billion, significantly expanding international operations.
- Distribution Solutions segment revenue grew by 13%, reaching $134.4 billion, with North America pharmaceutical distribution showing a 7% increase.
- Technology Solutions segment revenue increased by 5% to $3.2 billion, driven by acquisitions and higher claims processing volume.
- Operating expenses increased significantly due to acquisitions and integration costs.
- Net income attributable to McKesson Corporation decreased by 6% to $1.3 billion, impacted by increased expenses and discrete tax items.
- The company continued its share repurchase program, although activity decreased compared to prior years.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, McKesson Corp kept $0.01.
- Revenue$137.39B100.0%
- Cost of revenue−$129.04B93.9%
- Gross profit$8.35B6.1%
- Operating costs−$5.91B4.3%
- Operating income$2.44B1.8%
- Interest, other & tax−$1.18B0.9%
- Net income$1.26B0.9%
Where FY2014 revenue went
$137.39B- Cost of revenue: $129.04B, 94% of revenue
- Net income: $1.26B, 0.9% of revenue
- R&D: $457.0M, 0.3% of revenue
- SG&A: $5.39B, 3.9% of revenue
- Interest, other & tax: $1.18B, 0.9% of revenue
Kept 0.9% as net incomeNet income $1.26B · 0.9%R&D $457.0M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed May 14, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $137.39B$122.20B | +12.4% |
| Cost of Revenue | $129.04B$115.31B | +11.9% |
| Gross Profit | $8.35B$6.88B | +21.4% |
| R&D Expenses | $457.00M$433.00M | +5.5% |
| SG&A Expenses | $5.39B$4.11B | +31.1% |
| Operating Expenses | $5.91B$4.53B | +30.4% |
| Operating Income | $2.44B$2.35B | +3.9% |
| Net Income | $1.26B$1.34B | −5.6% |
| EPS (Basic) | $5.51$5.71 | −3.5% |
| EPS (Diluted) | $5.41$5.59 | −3.2% |
| Shares Outstanding (Basic) | 229.00M235.00M | −2.6% |
| Shares Outstanding (Diluted) | 233.00M239.00M | −2.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of McKesson's revenue growth in fiscal year 2014?
The primary driver of McKesson's revenue growth in fiscal year 2014 was the Distribution Solutions segment, which experienced a 13% increase in revenue, reaching $134.4 billion. This growth was significantly influenced by the acquisition of Celesio AG, alongside increased drug utilization and price increases.
How did the acquisition of Celesio AG impact McKesson's financial performance?
The acquisition of Celesio AG, completed in February 2014 for $4.5 billion, significantly expanded McKesson's international presence and contributed $4.8 billion in revenues from the date of acquisition through March 31, 2014. It also led to a substantial increase in consolidated debt and operating expenses due to integration costs.
What were the key challenges or risks highlighted in the filing for McKesson in fiscal year 2014?
McKesson highlighted several risks, including changes in the U.S. healthcare industry and regulatory environment, pricing pressures from manufacturers and large customers, potential impacts from branded pharmaceutical price inflation, competition, and risks associated with international operations due to economic conditions and regulatory changes in Europe. Additionally, the company faces risks related to cybersecurity, supply chain disruptions, and the successful integration of acquisitions.
06—Continue