McKesson 2008 Annual Report Download - page 3

McKesson delivered another outstanding performance in fi scal
year 2008. Our company’s ability to build and maintain strong customer
relationships and sustain continued operational excellence propelled us to
above-market revenue and earnings growth. We also made key investments
and leveraged our diverse assets to expand our range of service and
product offerings to deliver innovative solutions for our customers.
To Our Stockholders:
Extending our track record of superior
stockholder returns
Fiscal year 2008 was a year of milestones for McKesson. In
January, we marked our 175th anniversary, a distinction rarely
achieved in American business. Our revenues grew 9% to
reach $101.7 billion, exceeding $100 billion for the fi rst time.
Perhaps most gratifying, we received numerous awards and
signifi cant recognition from our customers and industry groups
for our superior service and solutions. I am very proud of our
employees, whose efforts made these achievements possible.
Our progress in fi scal year 2008 continued our track record
of superior fi nancial performance and stockholder returns.
During the fi ve-year period ending March 31, 2008, both our
revenues and earnings per share (EPS) grew at a compound
annual growth rate exceeding 8%. Over that time, McKesson’s
stock price more than doubled, outperforming both the S&P
500 Index and the Value Line Health Care Index. McKesson’s
stock price has also outperformed the shares of all other major
pharmaceutical wholesalers since October 2004.
Our fi nancial strength over the past three years enabled us
to make three major investments that create opportunities to
increase stockholder value. In fi scal year 2008, we signifi cantly
enhanced our presence in the fastest-growing sector of the phar-
maceutical market by acquiring Oncology Therapeutics Network
(OTN), a leading distributor of specialty pharmaceuticals. In 2007,
we made our largest acquisition since 1999 by joining forces with
Per-Se Technologies, Inc. (Per-Se), gaining a collection of fi nancial
and administrative solutions for hospitals, physicians and retail
pharmacies. Our acquisition of D&K Healthcare Resources (D&K)
in fi scal year 2006 expanded our footprint among independent
pharmacies in the Midwest. These are prominent examples of
investments that create new avenues of growth and enhance the
value we deliver to customers and stockholders.
Drawing on our formidable array of assets, we are serving
customers in ways that truly set McKesson apart in the market-
place. We are the healthcare industry’s most complete solution
provider, with the ability to deliver distribution and supply chain
services, software solutions, claims processing capabilities,
consulting services, pharmacy management systems, hospital
automation, disease management programs and many other
innovative offerings that satisfy our customers’ needs. We are
combining our capabilities in bold new ways to create unique,
innovative solutions that expand and redefi ne the segments in
which we compete and drive improvements across the entire
healthcare spectrum.
Building mutually rewarding
relationships with our customers
and manufacturer partners
At McKesson, we succeed when our customers succeed. Our abil-
ity to build mutually rewarding, long-term relationships with
our customers leads to future business opportunities and superior
returns for our stockholders. We take pride in the value we
deliver to our customers and are particularly gratifi ed when they
acknowledge the role we play in their success. In Distribution
Solutions this past year, our U.S. Pharmaceutical business
renewed agreements with CVS Caremark, Rite Aid, Safeway,
Cigna, Humana and Costco. We also received “Business Partner
of the Year” honors from Kinney Drugs. In the hospital seg-
ment, we were the only wholesaler to receive the “2008 VHA
Service Excellence Award,” as recognized by VHA’s member-
ship, which includes 28% of the nation’s community-owned,