McKesson 2010 Annual Report Download - page 3

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Rarely in our 177-year history has the Company
e
xperienced an era like the present — one that offers
so many opportunities
f
or success and growth in
the healthcare industry, while presenting so many
q
uestions about the path forward
.
A
n important lesson to be learned from our long
a
nd successful histor
y
is that chan
g
e presents
o
pportunities, and I can sa
y
with con
fi
dence that we
a
re well positioned to thrive in the years ahead.
F
ive
f
actors support m
y
positive outlook
f
or
fi
scal
011 and beyond:
1. Expanding Market
f
or Pharmaceuticals and
M
edical Supplie
s
I
n addition to the demo
g
raphic shifts drivin
g
lon
g
-term demand
f
or pharmaceuticals, the
p
harmaceutical market is ex
p
ected to ex
p
and in the
c
omin
g
y
ears
d
ue to t
h
e new Patient Protection an
d
Aff
ordable Care Act, which will add approximatel
y
3
2 million new patients to the healthcare system over
t
h
e next
d
eca
d
e. T
h
e
l
e
g
is
l
ation a
l
so see
k
s to
l
ower
healthcare costs, and pharmaceuticals o
ff
er one o
f
the most cost-effective ways to treat many illnesses
a
n
d
c
h
ronic con
d
itions. As t
h
e nation’s
l
ea
d
in
g
d
istributor o
f
pharmaceuticals and medical-sur
g
ical
supplies, one with unique solutions for enhancing the
e
fficienc
y
and effectiveness of the deliver
y
process
f
or these products, we stand to bene
fi
t
f
rom these
m
a
rk
et
t
r
e
n
ds
.
2
. Growing Demand
f
or Healthcare
In
f
ormation Technolo
gy
Th
e American Recover
y
an
d
Reinvestment Act
o
ffers incentives totalin
g
approximatel
y
$
19
b
illion to care
p
roviders who ado
p
t healthcare
in
f
ormation technolo
gy
(HIT). McKesson can help
p
roviders quali
f
y
f
or these
f
unds with our market-
leading clinical systems, analytics, and connectivity
solutions. The need for HIT is also expected to rise
d
ue to increased reportin
g
requirements, initiatives
to
p
revent hos
p
ital re-admissions, and com
p
lex
D
ear Fellow Stockholders
:
I
am pleased to report that McKesson delivered stron
g
results in
fi
scal 2010, an achievement made all the more remarkable b
y
the
c
hallen
g
in
g
economic environment we faced comin
g
into the
y
ear.
in
su
r
a
n
ce
r
e
im
bu
r
se
m
e
n
t
m
et
h
ods
. W
e
be
li
e
v
e
t
h
at
o
ur unmatched HIT solution portfolio positions us
e
xtremely well to meet these demands
.
3
. Dee
p
Customer Re
l
ations
h
i
p
s
W
ith so much change occurring in healthcare,
c
ustomers are looking for strategic partners who can
help them improve their
fi
nancial, operational, and
c
linical per
f
ormance. As re
fl
ected in our
fi
scal 2010
results, McKesson has been successful at building
b
roa
d
an
d
d
eep customer re
l
ations
h
ips in a
ll
areas
of
healthcare. These long-lasting partnerships open
d
oors to new opportunities wit
h
existing customers,
a
n
d
t
h
e
y
h
e
l
p t
h
e Compan
y
secure new
b
usiness
.
4. Strong Balance Sheet and Financial Flexibility
S
olid operatin
g
pro
fi
t, si
g
ni
fi
cant cash
fl
ow, and a
strong balance sheet give McKesson the ability to
d
eplo
y
capital for acquisitions, share repurchases,
a
nd dividends. Our
fi
nancial stren
g
th also allows us
to invest in research and develo
p
ment, infrastructure,
a
n
d
strate
g
ic initiatives t
h
at en
h
ance our competitive
position in the markets we serve.
5
. Proven Lea
d
ers
h
i
p
Team wit
h
a Trac
k
Recor
d
of
Superior Per
f
ormance
O
ur experienced executive team has consistently
proven its a
b
i
l
it
y
to overcome c
h
a
ll
en
g
es, exercise
fi
nancial discipline, and success
f
ull
y
execute on
opp
ortunities to increase stoc
kh
o
ld
er va
l
ue. Since
M
arch 31
,
2006
,
our revenues have increased from
$
87.0 billion to
$
108.7 billion, a compound annual
g
rowth rate of 5.7%, and diluted earnings per share,
e
xcludin
g
ad
j
ustments for liti
g
ation char
g
es (credits)
net, has increased from
$
2.48 to
$
4.58, a compound
a
nnual growth rate of 16.6%. Reflecting our
e
arnin
g
s per s
h
are
g
rowt
h
, McKesson’s stoc
k
price
has substantially outper
f
ormed both the Value Line
H
ea
l
t
h
ca
r
e
Secto
r In
de
x
a
n
d
t
h
e
S&
P 500 In
de
x.