mckesson corporation investor and analyst day presentation

Investor DayInvestor Day20062006

2Investor Day 2006

Larry Kurtz

Vice PresidentInvestor Relations

3Investor Day 2006

Some of the information in this presentation may constitute forward-looking statements that are subject to various uncertainties. These uncertainties could cause actual results to differ materially from those projected or implied. The risk factors associated with those uncertainties are described in theCompany’s reports and exhibits filed with the Securities and Exchange Commission. Financial information is presented here in summary form. Full details are provided in the Company’s most recent 10-K report. All of this information is available at www.mckesson.com. The Company assumes no obligation to update or revise any such statements, whether as a result of new information or otherwise.

Safe Harbor Clause

4Investor Day 2006

Investor Day Agenda

John Hammergren, Chairman and CEO

Jeff Campbell, EVP and CFO

Break

Paul Julian, EVP, Group President

Pam Pure, EVP, President, MPT

Q&A

5Investor Day 2006

Placeholder for Video

6Investor Day 2006

John Hammergren

Chairman and Chief Executive Officer

7Investor Day 2006

Why Invest in Healthcare Services?

Why Invest in McKesson?

Why Now?

8Investor Day 2006

Factors Driving Sustained Value Creation at McKesson

Well-positioned in growing healthcare services markets

Strong and growing global businesses:Solid operating profit from core pharmaceutical distribution business

Upside opportunities from higher-growth, higher-margin businesseswithout focused risk exposure

Track record of improving financial performance producing strongbalance sheet and solid cash flow enables disciplined and opportunistic portfolio approach to shareholder value creation

Experienced and deep management team

Sustained Value CreationSustained Value CreationSustained Value Creation

9Investor Day 2006

McKesson At-a-Glance

$88 billion in revenues in FY06

FY06 EPS $2.44 (excluding Securities Litigation charge and Discontinued Operations)

More than 26,000 employees

304 million shares outstanding

$14 billion market cap

Founded 1833, headquartered in San Francisco

126% Return to Shareholders since April 1, 2000

10Investor Day 2006

McKesson at the Center of Healthcare

$1.6 billion of drugs per week –35% of drugs in North America

Scanning 300 million doses per year to

prevent 203,000 med errors per week

99% daily fill rates to 25,000 pharmacies

Information solutions used by

3,500 hospitals, 200,000 physicians, 500,000 nurses and

600 payors

Disease management for

1.5 million Medicaid and Medicare

patients

Diagnostic care guidelines for 3,500 health plans, hospitals and

government agencies

11Investor Day 2006

PharmaceuticalSolutions

#1 in U.S., Canada, and Mexico

#1 generics distributor

Large Rx repackaging

Specialty distribution & patient services for

manufacturers

#1 in medical management software and services for

payors

#1 in disease management for Medicaid agencies

Medical-SurgicalSolutions

#1 in primary care

#1 in extended care

Private label product offerings

Rapid growth in physician office pharmaceuticals and equipment

Leading Market Positions in All Three Segments

Provider Technologies

63% of U.S. health systems

Leader in clinical, revenue cycle, and resource

management solutions

More “Best in KLAS”products than any

other vendor

#1 hospital automation

Emerging business in U.K and France

$83.4 billion revenues$1.2 billion op profit

$3.1 billion revenues$70 million op profit

$1.5 billion revenues$143 million op profit

Note: Financial information for year ending FY06

12Investor Day 2006

Are We in the Right Businesses for Today and Tomorrow?

13Investor Day 2006

Healthcare Spending on the Rise in Dollars and as a Percent of GDP

16%20%

2005 2015

$2 Trillion

$4 Trillion

14Investor Day 2006

Well-Positioned in Growing Markets

U.S. Pharmaceutical$252 B 5-8% projected growth (1)

Canadian Pharmaceutical $12 B US5-7% projected growth (1)

HIT – Hospital, Alternate Site and Automation$28 B6-7% projected growth (3)

(1) IMS(2) Medical Devices & Supplies Market Update(3) Datamonitor, 2005(4) Includes medical management software/content, disease management, coding, compliance services

U.S. Medical-Surgical $80 B6-8% projected growth (2)

Payor – Outsourced and Software$8 B20-25% projected growth (4)

15Investor Day 2006

Demographics Continue to Drive Drug Consumption

16Investor Day 2006

Medication Needs Increase with an Aging Population …

Number of Americans 60 and Older(in millions)

10.8 13.0 16.7 18.8 20.9

30.834.6

34.140.0

47.3

5.16.1

6.8

7.3

4.2

2000 2005 2010 2015 2020

85+65-8460-64

45.8

49.756.9

65.6

75.5Annual Number of Prescriptions

per Age Group

2.9 2.3 2.74.1

6.0

11.6

15.9

20.5

22.623.5

0-4 5-14 15-24 25-34 35-44 44-54 55-64 65-74 75-84 85+

Source: US Census Bureau Source: University of Delaware

17Investor Day 2006

0%

1%

2%

3%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20156%

7%

8%

9%

10%

11%

12%

Drug Spending as a % of GDP Drug Spending as a % of HealthcareSource: CMS

… Driving Up Drug Spending

18Investor Day 2006

Focus on Generics Creates

Profit Opportunities

19Investor Day 2006

Patent Expirations Driving Increased Generics Sales

CAGR 2003-2008 : 12.8%; Merrill Lynch; IMS; McKesson analysis

Annual Patent Expirations$ Billions

$11

$15

$9

$20

$16$14

2003 2004 2005 2006 2007 2008

Est. U.S. Generics Industry$ Billions

$17$20

$23$26

$28$31

2003 2004 2005 2006 2007 2008

20Investor Day 2006

Increased Generics Sales Leads to Margin Expansion

Generic Scripts as a % to Total

47% 47% 47% 48% 50%53%

57% 59%62%

65% 66%70%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: IMS and Express Scripts

21Investor Day 2006

Focus on Healthcare Quality Drives Use of

Information Technology

22Investor Day 2006

Rising Concern about Quality of U.S. Healthcare

98,000 or more Americans killed per year by medical mistakes

57,000 or more dying from inadequate care

4-fold variation in cost with similar quality to international average

Ranked 37th in overall health system performance by WHO

New Quality Standards and Pay-for-Performance

New Quality Standards and New Quality Standards and PayPay--forfor--PerformancePerformance

23Investor Day 2006

Increasing Use of the Internetby Patients …

80% of Internet users or 93 million American adults seek health information – 6 to 8 million on any given day

Heaviest use – information on illness of self or others

Online patient support groups, healthy web sites, physician and provider information and communication

Information Age MedicineInformation Age MedicineInformation Age Medicine

24Investor Day 2006

… Encourages More Use of the Internet by Physicians …

52.9%

40.6%36.6%

23.6%

11.4%

64.8%

50.1% 50.4%

29.3%

21.9%

Obtain Guidelines Exchange ClinicalData

Access Patient Notes Generate Reminders Write Prescriptions

2000-012004-05

Source: Community Tracking Study Physician Survey

25Investor Day 2006

… And Increasing Use of Clinical IT in Their Practices

16.8%

25.8%

20.2%

24.8%

22.0%

22.5%

20.1%

15.8%

20.9%

11.1%

2004-05

2000-01

IT in None IT in One IT in Two IT in Three IT in Four or Five

Source: Community Tracking Study Physician Survey

26Investor Day 2006

Government Support Growing for More Use of Information

Technology in Healthcare

27Investor Day 2006

Escalating Costs of Healthcare Create Demand for Disease

Management

28Investor Day 2006

Most Healthcare Resources Are Spent on Chronic Diseases …

Source: Centers for Disease Control, 2003 Data

Chronic Care$1 Trillion

Acute Care$0.4 Trillion

85% of all hospital costs and 69% of all physician costs go to treat chronic

diseases

57%

72%

12.5%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Diabetes Asthma Hypertension Population

Increases in chronic disease prevalence (1990-2000)

Increases in chronic disease prevalence Increases in chronic disease prevalence (1990(1990--2000)2000)

Distribution of healthcare spending in the US – acute vs. chronic -

Distribution of healthcare spending in the US Distribution of healthcare spending in the US –– acute vs. chronic acute vs. chronic --

29Investor Day 2006

… Driving Rapid Growth of Disease Management$ Millions

60

124

203

263

359

479

0

100

200

300

400

500

1997 1998 1999 2000 2001 2002

Source: McKesson Management Team

1,543

744

2,540

4,350

6,697

7,5287,018 7,287

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2003 2004 2005 2006 2007 2008 2009 2010

Source: 1987-2002 Disease Management Purchasing Consortium. 2003-2010 McKesson Internal Data

Historical growth Projected growth

Disease management stands to become a $20 Billion a year industry in the US– The Wall Street Journal

Disease management stands to become a $20 Billion a year industrDisease management stands to become a $20 Billion a year industry in the USy in the US–– The Wall Street JournalThe Wall Street Journal

CAGR 52%

$ Millions

CAGR 39%

30Investor Day 2006

Increasing Amount of Healthcare Focus and Spending Is Outside

the Hospital

31Investor Day 2006

$0

$300

$600

$900

$1,200

$1,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: CMS

$ Millions

Includes Physician Offices, Clinics, Nursing Homes

Alternate Site Spending Is Growing Significantly …

32Investor Day 2006

$0

$20

$40

$60

$80

$100

$120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: CMS

$ Millions

Home Healthcare

… As Is Spending on Home Healthcare

33Investor Day 2006

Strong Market Growth Across All McKesson Businesses

34Investor Day 2006

Are We Serving the Needs of Our Customers?

35Investor Day 2006

Creating Customers for Life

Working together with our customers to use the clinical knowledge, process expertise, technology and the resources of a Fortune 16 company to change the

future of healthcare for the better.

Create long-termrelationships based on custom solutions

that deliverROI & quality

Sell McKesson’s comprehensive

offering

Introduce innovations that address emerging

healthcarechallenges

36Investor Day 2006

Long-term Relationships with Global Healthcare Leaders

Vanderbilt University Medical CenterVanderbilt University Medical Center

http://www.omnicare.com/default.htm

http://home.businesswire.com/portal/site/home/index.jsp?epi-content=GENERIC&newsId=20060601005730&ndmHsc=v2*A1147086000000*B1149726548000*DgroupByDate*J2*L5*N1000003*Ztriad%20hospitals&newsLang=en&beanID=2133606841&viewID=news_view

37Investor Day 2006

One McKesson Solutions Create Stronger Relationships

38Investor Day 2006

One McKesson

Pharmaceutical Prime Vendor since May 2004Daily delivery of drugs to >600 hospitals and 7 mail order facilities

Two mail order Automation Installs

Inpatient Robots, Medication Carousel and a dozen medication cabinets

Heart Disease Management Pilot—Veterans Integrated Service Network 17

Pharmaceutical Re-Packaging

CDC/Strategic National Stockpile support

Disease Management

Enterprise InterQual utilization tools

Claim-Check SW at VHA Fee Sites

Total size of 8 year contract - $32 to $35 billion

39Investor Day 2006

One McKesson

Strategic Business Partner – Relationship since 1989Pharmaceutical Distribution Agreement since 2002

100% OneStop Generics

Clinical Auditing and Compliance Division

Enterprise InterQual utilization tools

High Volume Solutions

Medical-Surgical homecare

Pathway compliance advisor

Specialty – Prospective Health

Total size - $1.6 billion

40Investor Day 2006

One McKesson

Relationship since 1988Pharmaceutical Distribution – 100% Direct Store Delivery customer

Central Fill in Everett Washington with 2nd site being targeted

OneStop Generics customer

Specialty pharma distributor for Costco's Prescription Benefit Administration Network

Verispan data partner and Verispan's analytical tools for pharma market

Total size - $1.1 billion

41Investor Day 2006

One McKesson

Relationship since 1994100% sole source customer

90 pharmacies in ‘94, growing to over 1300 in FY’07

Annual volume has grown from $90M per year to a projected $1.5B for FY’07

Target is McKesson’s largest purchaser of OneStop Generics in the Retail National Account segment

Recently, McKesson was acknowledged for its innovation and broad array of strategic capabilities by being made a member of Target’s Strategic Partnership alliance, which includes companies such as Proctor Gamble, J & J, 3M, Nabisco, and PepsiCo

42Investor Day 2006

One McKesson

Strategic Business Partner – Relationship since late 80sPharmaceutical distribution since 2001

3 hospitals, emergency department and clinical research center

Broad range of McKesson healthcare IT – Horizon Clinicals, revenue cycle and supply chain

Automation solutions in process

Horizon Expert Orders agreement established in 2001More than 150 hospital site visits hosted

Half of sites visiting Vanderbilt purchased Horizon Expert Orders

Commercial version of Horizon Expert Orders and Horizon Expert Documentation installed, rolling out other Horizon Clinicals products

43Investor Day 2006

One McKesson

Relationship since 1996Pharmaceutical distribution since 1998

3 hospitals, 588 beds

Over past 3 years, named one of the 100 Most Wired healthcare systems in the U.S.

Top 1% of Premier’s “low cost” hospitals

Full range of McKesson IT solutions, including revenue cycle, supply chain and Horizon Clinicals

Automation technologies include ROBOT-Rx, IntelliShelf Supply, AcuDose-Rx cabinets, bar-coded medication administration

44Investor Day 2006

One McKesson

Relationship since 2001500 bed community hospital

An acute care site, 300 bed long term care facility and regional cancer centre

One McKesson Canada: 1. McKesson Information Solutions:

Outsourced siteMost advanced Horizon site in CanadaDevelopment partner for Horizon Patient Portal

2. McKesson Automation:Robot-Rx plus 16 AcuDose cabinets

3. McKesson Distribution:Participant in Prime Vendor Program

http://www.grandriverhospital.on.ca/index.html

45Investor Day 2006

Strong Market Growth and Strong Customer Relationships

Drive Strong Financial Performance

46Investor Day 2006

Jeff Campbell

Executive Vice President Chief Financial Officer

47Investor Day 2006




Upside opportunities from higher-growth, higher-margin businesses without focused risk exposure




48Investor Day 2006

Track Record of Improving Financial Performance

49Investor Day 2006

Six Years of Strong Growth …

FY00 FY01 FY02 FY03 FY04 FY05 FY06

Warehouse SalesDirect Revenues

$36.7 $42.0

$50.0$57.1

$69.2

$80.1$88.1

16% CAGR (total sales)

$ Billions

50Investor Day 2006

…Leveraged into Higher EPS …(continuing operations)*

$2.44

$2.18

($0.15)

$0.65

$1.43

$1.89

$2.18


25% CAGR

* EPS from continuing operations, excluding securities litigation charges.

51Investor Day 2006

... Through Operating Leverage ...

3.07%3.05%3.26%

3.73%3.92%

4.16%

5.73%

0%

1%

2%

3%

4%

5%

6%


Ope

ratin

g Ex

pens

es* %

of R

even

ues

* Excludes the impact of Securities Litigation

52Investor Day 2006

... And Productivity Gains

$146

$137$132

$126$116

$105$104


Annual Gross Profit/Employee $ thousands

Note: Total company Gross Profit and employees

53Investor Day 2006

Segment Financial Highlights

54Investor Day 2006

Pharmaceutical Solutions

Revenues(in billions)

$83.4$75.9

FY05 FY06

Op. Margins %

1.45%

1.41%

FY05 FY06

Operating Profit(in millions)

$1,211

$1,071

FY05 FY06

Target: 150 – 200 bp

55Investor Day 2006

Four Levers for OperatingMargin Expansion

Goal of

Pharma

Operating

Margin: 150

to 200 bp

GenericsGenerics

Mfr. Comp.

Mfr. Comp.

Operating Expenses

Operating Expenses

Sell MarginSell

Margin

+ -

56Investor Day 2006

Medical-Surgical Solutions


$3.1

$2.9

FY05 FY06

Op. Margins %

2.26%

3.52%

FY05 FY06


$70

$102

FY05 FY06

Target: 4% - 6%

57Investor Day 2006

Provider Technologies


$1.5

$1.3

FY05 FY06

Op. Margins %

9.27%

8.22%

FY05 FY06


$107

$143

FY05 FY06

Target:Low to mid-teens

58Investor Day 2006

Growing Contributions from International Operations

McKesson Canada – pharmaceutical distribution, specialty distribution, automation, healthcare information technology

U.S., Canada and Mexico – global agreements with pharmaceutical manufacturers and customers

U.K., France and the Netherlands – building upon NHS success and strong clinical solutions to drive growth

Australia and New Zealand – emerging disease management business based on success of U.S. model

Global sourcing of Medical-Surgical products and generics

>5% of total revenue >10% of operating profit

>5% of total revenue >5% of total revenue >10% of operating profit>10% of operating profit

59Investor Day 2006

Strong Balance Sheet and Portfolio Approach to Capital

Deployment

60Investor Day 2006

DSI/DSP Trends Favorable …

25

30

35

40

45

50

Q4-00 Q4-01 Q4-02 Q4-03 Q4-04 Q4-05 Q4-06

Total Company DSI Total Company DSP

Decrease of 13 days DSIIncrease of 2 days DSP

# of days

61Investor Day 2006

… DSO Improvement of 5 Days with $50B in Additional Sales …

15

20

25

30

Q4-00 Q4-01 Q4-02 Q4-03 Q4-04 Q4-05 Q4-06

Total Company DSO

# of days

62Investor Day 2006

… Producing Strong Cash Flow from Operations …

($0.4)

$0.3 $0.2$0.8 $0.6

$1.5

$2.7


$5.7 Billion of Cumulative Cash Flow$ Billions

63Investor Day 2006

… All of Which Provides A Strong Balance Sheet …

29.2% 29.2% 29.4%

18.7%

25.0%

14.4%

22.3%


Gross Debt to Capital Ratio

64Investor Day 2006

… Which Enables Portfolio Approach to Capital Deployment

Increased financial flexibility to continue to execute our strategy

Increased financial flexibility to continue to Increased financial flexibility to continue to execute our strategy execute our strategy

AcquisitionsSynergistic opportunities

Accretive/Value add in line with long term strategy

Measured share repurchase over time

Solid dividend policy periodically reviewed

Internal investment

65Investor Day 2006

Significant Capital Deployment in Fiscal 2006 …

$958M

$73M

$327M

$603M

Share Repurchase Acquisitions Dividends Capital Expenditures

McKesson deployed almost $2 billion to create additional shareholder value in FY06

49%

17%

4%

30%

66Investor Day 2006

… With Significant Financial Flexibility to Create Further Value

Cash

$1.0 BReq’dOps

Debt Capacity

Op Cash Flow

14.4%

Target30-40%

$1+ BSignificant Capital for

Future Deployment

$1.1 B

67Investor Day 2006

Commitment to Clear

Communication

68Investor Day 2006

Best Practices in Financial Communication

Detailed financial reporting focused on ongoing business performance

Guidance: range of annual EPS with key drivers and assumptions noted

Extensive disclosure in public filings

Informative additional communications

Access to management

69Investor Day 2006

Fiscal 2007 Outlook

70Investor Day 2006

Fiscal 2007 earnings per diluted share from continuing operations of

$2.55 to $2.70excluding Securities Litigation

charges or credits

Earnings Guidance

71Investor Day 2006

What’s Included in Fiscal 2007 Outlook?

Impact of Q1 restructuring at Provider Technologies, acquisitions of HealthCom and RelayHealth, sale of APS to Parata

Termination of OTN logistics arrangement

Significantly lower anti-trust settlements

Equity-based compensation expense of 8 to 10 cents per share

Tax rate of 35%

Continuing operations only

72Investor Day 2006

John Hammergren

Chairman and Chief Executive Officer

73Investor Day 2006

Culture and Values Drive Behavior

74Investor Day 2006

Business Metrics Drive Results

To achieve the best financialperformance in the industry,

as measured by EBIT and ROIC

Financial Success

To provide an environmentthat attracts and retains

outstanding talent

Employee Satisfaction

To fulfill our commitments toour customers and to

each other

Business Process Success

To have the most satisfiedcustomers in the industry

Customer Satisfaction Metric-Driven Execution

75Investor Day 2006

Focused Priorities to Achieve FY07 Results

Pharmaceutical SolutionsFurther expand generics businessContinue to grow Payor disease management and software business

Medical-Surgical SolutionsResolve strategy for acute care sectorRestructure for enhanced focus on alternate site sector

Provider TechnologiesTake advantage of current clinical waveEstablish leadership in ambulatory & patient sectors

CorporateCapital deployment to accelerate shareholder value creation

76Investor Day 2006

How We Evaluate Capital Deployment

Disciplined but opportunistic

No predetermined capital allocations

Share repurchase is the baseline for ROIC

Acquisition focus on market penetration, product line extension, complementary businesses, future direction of our markets

77Investor Day 2006

Experienced Management Team Leads Strategy and Execution

John H. HammergrenChairman and CEO

Jeffrey C. CampbellEVP and CFO

Paul C. JulianEVP and Group President

Paul E. KirincicEVP Human Resources

Marc E. OwenEVP Strategy and Bus Development

Pamela J. PureEVP and President MPT

Randall N. SprattEVP and CIO

Laureen E. SeegerEVP General Counsel

78Investor Day 2006




Upside opportunities from higher-growth, higher-margin businesseswithout focused risk exposure




79Investor Day 2006

Why Invest in Healthcare Services?

Why Invest in McKesson?

Why Now?

80Investor Day 2006

Break

81Investor Day 2006

Paul JulianPaul Julian

Executive Vice PresidentGroup President

82Investor Day 2006

Agenda

Introduction


Business Overview

FY06/07 Update

Medical-Surgical Solutions

Business Overview

FY06/07 Update

83Investor Day 2006

Comprehensive North American DistributionSignificant Share to all Channels

$87B in Revenues

US Pharmaceutical DistributionRetail Automation (Parata)Specialty Pharmaceutical ServicesHealth Solutions (Payor)

Primary CareExtended CareAcute CareHome CareMoore MedicalZee Medical

Pharmaceutical SolutionsPharmaceutical Solutions Medical Surgical SolutionsMedical Surgical Solutions

CanadaPharmacy OutsourcingPackagingVerispan JVNADRO

Profile of Business Units

84Investor Day 2006


85Investor Day 2006

U.S. Pharmaceutical Broad Customer Solution Set

National Chain Pharmacy

Health SystemsDistribution ExcellenceGenericsCentral FillAutomationPharmacy SystemsVerispan

Regional Chain Pharmacy

Retail PharmacyDistribution ExcellenceGenericsManaged Care ContractingAutomationPharmacy SystemsPrivate BrandHealth Mart Franchise

Distribution ExcellenceRe-Distribution CenterCentral FillSix SigmaVerispanAutomationSpecialtyGenerics

Distribution ExcellencePatient Safety SolutionsClinical IT SolutionsPharmacy SystemsPackaging ServicesOutpatient PharmacyOneMcKesson

86Investor Day 2006

U.S. Pharmaceutical Environment

IndustryIndustry

$252B market growing estimated 5-8%

Increased focus on generics with higher generic penetration and >$50B in brand revenue going off-patent by 2008

Channels shifting – mail order growth outpaces that of retail

Public policy influence –Medicare & Medicaid reforms

Public PolicyPublic Policy

FederalMedicare Modernization Act Public health preparednessPatient Safety issues

StatePedigreeMedicaid ReformMethamphetamine controls

87Investor Day 2006

U.S. Market Pharmaceutical Sales$ Billions

Note: All references are calendar years, not fiscal. Source: IMS Health, IMS National

Components of Growth(CY 2003-2009)

UpwardPotential blockbusters in pipelineUnder-treated disease statesMedicare benefitDirect to Consumer (DTC) spending increasingDemographics

DownwardDelayed branded launchesBranded pipeline weaknessMore aggressive genericsStronger OTC impactPrice pressures2002 2003 2004 2005 2006E 2007E 2008E 2009E

$194

CAGR = 11%

CAGR = 8% $347

U.S. Pharmaceutical Solid Growth

88Investor Day 2006

U.S. Pharmaceutical FY06 Key Accomplishments

Completion of buy-side transition

Stable sell-side margins

Increased generics penetration in all segments

Continued focus on operational excellence

Medicare Modernization Act

Successful D&K acquisition and integration

Re-signed all customer renewal agreements

89Investor Day 2006

Six Sigma Drives Industry Leading Performance Metrics

* Based on Purdue University’s Benchmark Portal Research

Fully integrated Distribution Center NetworkNational Redistribution Center & 30 U.S. DCs 50,000 Rx & OTC SKUs24,000 daily deliveries via 52 couriers

Tremendous volume of transactions processed2.1M customer orders and invoices processed monthly $375M of pharmaceuticals & OTC product purchased daily

Superior service levels and pricing accuracy93+% raw service level – industry leading99.96% picking accuracy 0.14% invoice pricing discrepancy rate vs. 0.44% industry average

Centralized ServiceFirst call centersOver 8.5M calls handled annuallyMost accessible Support Center in the Industry*

90Investor Day 2006

Capital Expenditures Continue to Improve Operations

IT investment – “One IT” strategy to simplify technical landscape, increase reliability and stability, and improve operating margin

Investing in ERP systemDecommissioning legacy systemsContinued investment in internet technologies (SMO)

Distribution NetworkDistribution Center optimizationSignificant capacity upgradesLeverage re-distribution centerDevelop central fill capabilitiesIntegration of D&K distribution centers

91Investor Day 2006

U.S. Pharmaceutical Continues Focus on Core Priorities

Buy Side / Fee For Service

Sell-Side Strategy

Generics

Operational Excellence



FY06 PrioritiesFY06 PrioritiesFY06 Priorities

Buy Side / Fee for Service

Segment-specific sell side strategies

Margin expansion via focus on generics

Operational Excellence


Public Policy

FY07 PrioritiesFY07 PrioritiesFY07 Priorities

92Investor Day 2006

Four Profit Levers

GenericsGenerics

Mfr. Comp.

Mfr. Comp.

Operating Expenses

Operating Expenses

Sell MarginSell

Margin

+ -

Operating margin has fluctuated very little

over the past 35 years

(150-200bp)

93Investor Day 2006

Buy Side

Fee for service agreements 99% of suppliers successfully converted

Significant reduction in working capital

Reduced seasonality of earnings

Better relationship with manufacturers

94Investor Day 2006

Sell Side

Stable competitive environment and marginsCompete primarily on service and value

Customer retention

Sell value-added services

Execute segment-specific strategiesIndependentsRetail National Accounts / Mail OrderMcKesson Health Systems

95Investor Day 2006

McKesson is Well Positioned for Generics Wave

McKesson is the largest distributor of generics

International generics sourcing program

New GenericsConnecttelemarketing program enhances relationships with existing customers

Offer generics programs to meet needs of all customer segments

$11

$15

$9

$20

$16$14

2003 2004 2005 2006 2007 2008

Annual Patent Expirations$ Billions

Source: Merrill Lynch; IMS; McKesson analysis

96Investor Day 2006

McKesson Generics Are a Win-Win for Everyone

Volume purchasing powerCompetitive vendor bid processExpanded margin opportunitiesDistribution efficiencies

McKessonManufacturer

Economies of scaleAuto-substitution featureConsistent demandSingle point of deliveryNew product launch auto-ship program

Customer

Proprietary generics program offerings for all segmentsGenerics utilization diagnostic ToolAuto-substitution FeatureOnline ordering and supply management New product launch auto-ship program

97Investor Day 2006

Opportunity to Increase Proprietary Program PenetrationSegment Sales PenetrationIndependent and Small Chain + + + + +National Chain – non warehouse + + + + +National Chain – warehouse + + + + +Mail Order – warehouse + + + + +Health System – outpatient + + + + +Health System – inpatient + + + + ++ = penetrated + = positioned for growth + = under-developed

All segments have opportunity for incremental sales growth as market momentum builds and customers look for generic Rx purchasing and

distribution solutions with proven track records

98Investor Day 2006

Direct BuyingDirect

Buying +

Brand to Generic Conversion Drives Profitability

Price Deflation

Price Deflation = Top Line

ContractionTop Line

Contraction

Increased Purchasing

Power

Increased Purchasing

Power+ Expanded

Sell MarginExpanded Sell Margin = Bottom Line

GrowthBottom Line

Growth

Example: Product X generated $1.8 million in annual Operating Profit for MCK as a branded pharmaceutical When Product X went off-patent, top line sales decreased by 80% but annual EBIT for McKesson increased by 6.5%

99Investor Day 2006

McKessonSpecialty

100Investor Day 2006

Specialty Environment

Specialty Pharmaceutical markets represent approximately $41B in 2005, projected to grow at 17% CAGR

Expected to grow from 16% of total Rx market to 26% of total Rx market in 2010

Biologics and oncology represents 33% of late stage pipeline

Very expensive drugs ~$1400/Rx – leading to increased Payorfocus

Require unique distribution support


McKesson Specialty Poised to Compete

McKesson Specialty offers unique programs that meet customer needs

Marketing/ Reimbursement Services

LoyaltyScript; Amgen, Genentech, Serono reimbursement

NOA, Avastin, Herceptin, Sutent, Orencia

UHC, Regence

Distribution

Pharmacy


North America Distribution


McKesson Canada Leads Market

Solid Rx industry growth parallels US market

Stable business with leading market share position for 10+ years35% of total Rx market Over 75% of hospital segment60%+ of distributed market

Distribution and service agreements with key Canadian players Katz Group, Uniprix, Safeway, Loblaws, Proxim, CPDN, Quebec Hospital buying groups

One McKesson strategy brings selected McKesson products/services to Canadian market to diversify revenue base

Automation, Specialty, Informatics, Health related software


Nadro Investment Performing Well

Increased stake in NADRO from 22% to 49%

Leading market share in growing market~25% market shareProjected five year industry growth rate 7-9%

Key customers include largest retailers in Mexico such as Wal-Mart Mexico

Emerging generics market in Mexico creates new opportunities

Focus on expansion in profitable independent market


Health Solutions (Payor)


IndustryIndustry

Disease management growing at 20-30%

Software market growing at 8-10%

Payor consolidation

Two key customer segmentsGovernmentCommercial

Market is demanding integrated approach/ solution


Federal/State Funding of disease management


State regulation for prompt pay and contracting standards

Driving Payor and Providorconnectivity

Health Solutions (Payor) Environment


Health Solutions Well Positioned in Growing Payor Market

Market leading position with payors75% of Medicaid Disease Management market

Participation in Medicare pilot program (Mississippi)

#1 position in clinical criteria software applications (Interqual)

#1 position in claims performance software applications

Interoperability platform across products leverages unique assets for Payor Solutions


Medical Surgical Solutions


Medical-Surgical Solutions Broad Customer Solution Set

Acute Care

Distribution ExcellenceSupplies & Equipment, in-Office Rx & VaccinesMcKesson Brand ProductsPractice Management & EMRInventory Management Tools

Long Term Care / Home CareDistribution ExcellenceSupplies & Equipment, Vaccines, and RespiratoryMcKesson Brand ProductsInventory & Budget Management ToolsDirect to Patient ServicesCharge Capture & Reimbursement Services

Primary CareSurgery Center

Distribution ExcellenceMcKesson Brand ProductsInventory Management ToolsCost Savings ServicesRx

Distribution ExcellenceSupplies & Equipment, in-Office Rx & VaccinesMcKesson Brand ProductsPractice Management & EMRInventory Management Tools


IndustryIndustry

Highly fragmented alternate site market

Solid organic growth of 6-8%

Cost, technology, demographics, and consumerism driving care to non-acute sites

More services being performed in physician office


Medicare Modernization Act-Reimbursement

Durable Medical Equipment Reform

Telehealth

Pedigree

Medical-Surgical SolutionsEnvironment


Medical-Surgical Solutions FY06 Key Accomplishments

Strong results in non-acute care segmentsAlternate site revenue growth of 9%

Zee Medical revenue growth of 9%

McKesson brand sales growth of 20%

Record flu season sales

Successful AcquisitionsSterling – Entered Direct-to-Patient HC Market

Moore Medical Expansion - Telemarketing


Medical-Surgical Solutions Focus on Non-Acute Business

Explore Acute Care strategic alternatives

Leverage One McKesson assets to expand products and services in non-acute sites

McKesson Brand expansion

Sourcing capabilities expansion

Integrate Sterling

Drive operational efficiency


Pharmaceutical Solutions#1 in U.S., Canada, and Mexico#1 distributor of generics#1 in medical management software and services for payors#1 in disease management for Medicaid agencies

Medical-Surgical Solutions#1 in primary care#1 in long term care and home carePrivate label product offeringsRapid growth in physician office pharmaceuticals and equipment

Key Takeaways


Pam Pure

Executive Vice President President,

McKesson Provider Technologies


McKesson Provider Technologies

• Hospitals: 36% of total; 54% > 200 beds• Physicians: 18% >100 MDs

• Homecare: 24% > 50K visits• EDI: 400M+ transactions/yr

• $1.5B+ revenue• 15% to R&D

• 7,000+ employees• 300+ clinicians

COMPANY PROFILE COMPANY PROFILE –– ““Largest HCIT CompanyLargest HCIT Company””

Software and Automation Products• Clinical and Medication Management• Resource/Supply Chain Management• Revenue Cycle Management

Services• Technology• Consulting• Outsourcing

SOLUTIONS PORTFOLIO SOLUTIONS PORTFOLIO –– ““Most Comprehensive OfferingMost Comprehensive Offering””

CUSTOMER BASE CUSTOMER BASE –– ““Our Most Valuable AssetOur Most Valuable Asset””


MPT – We Are On A Roll…

Strong momentum with Horizon ClinicalsUnique medication management strategy continues to differentiate

Physician order entry strengthens competitive position

Accelerating leadership in medical imaging

Continued leadership in revenue cycle solutions

Ambulatory gaining powerful traction

Redefining the consumer experience

Continued progress in international business


10%10%60%60%

30%30%

OtherOtherHospitalsHospitals

AmbulatoryAmbulatory

Focus onHealthcare

Focus onHealthcare

Shift in Market Dynamics – From Hospital to Other Settings of Care


Healthcare Leadership Strategy

Patient RecordPatient Record

Revenue Cycle Management

Revenue Cycle Revenue Cycle ManagementManagement

AmbulatoryEHR

AmbulatoryAmbulatoryEHREHR

InpatientClinicals

InpatientInpatientClinicalsClinicals

Patient Connectivity

Patient Patient ConnectivityConnectivity

CommunityHospital

PortalsPortals

PayorConnectivity

PayorPayorConnectivityConnectivity

Physician Office

Interoperability with Non-McKesson ProductsInteroperability with Non-McKesson Products


In the Hospital

In the Physician’s Office

In the Home

Why Do We Win?


KLAS Clinical Market Share Report: Raw Hospital Count (200+ beds) New CIS Contracts by Year per Vendor – Additive 2002 – 2006 June ‘06

0

20

40

60

80

100

120

2002 2003 2004 2005 2006

Cerner Millennium Eclipsys SCM EpicCareGE Centricity IDX Carecast McKesson HCDMeditech C/S Misys CPR QuadraMed AffinitySiemens Soarian

Num

ber o

f Con

trac

ts

McKesson

CernerEpic

EclipsysSiemens

GE/IDXMeditech

QuadraMed

Misys GE Cent.

KLAS Clinical Market Share, p.20, June 2006 © 2006 KLAS Enterprises, LLC. All rights reserved


Cerner Meditech Eclipsys Siemens

Newly Released KLAS ScoresTop 20: KLAS 2006 Mid-Year Report Card

Acute Care CDR, Orders & ChartingPACS * -- --

Cardiology Reporting & Documentation

-- -- --

Emergency Department Systems

-- --

Document Management & Imaging

-- *Surgery Management -- --

Financial/ERP -- * -- --

Acute Care Registration, Scheduling & Patient Acctg *Community HIS -- --

McKessonMcKesson

Source: Top 20: KLAS Mid-Year Report Card, June 2006, www.healthcomputing.com, © 2006 KLAS Enterprises, LLC. All rights reserved

= KLAS ranking lower than highest ranking of selected vendors * = No KLAS Ranking

-- = No Product listed in KLAS Report= KLAS ranking highest of selected vendors

http://www.healthcomputing.com/


Why Do We Win? Leadership in the Hospital

Power of the SolutionMedication Safety

Clinical Decision Support and Physician Order Entry

Medical Imaging

Clinical Analytics

Revenue Cycle

No. 1 Solution for Small Community Hospitals


Why Do We Win?Medication Safety - More than Software

Full Medication Safety SolutionFulfill-Rx connects to distribution center MedCarousel and high-speed packaging to manage medicationsHorizon Meds Manager automates pharmacyROBOT-Rx dispenses one-half BILLION unit doses virtually error-free each yearIntelliShelf-Rx for RF-based dispensingBar-coding to prevent 200K medicationerrors per week

InnovationCarePoint-RN increased nursing direct patient care by 28%4 patents issued and 2 filed


Why Do We Win?Medication Safety - More than Software

Full Medication Safety SolutionFulfill-Rx connects to distribution center MedCarousel and high-speed packaging to manage medicationsHorizon Meds Manager automates pharmacyROBOT-Rx dispenses one-half BILLION unit doses virtually error-free each yearIntelliShelf-Rx for RF-based dispensingBar-coding to prevent 200K medicationerrors per week

InnovationCarePoint-RN increased nursing direct patient care by 28%4 patents issued and 2 filed

AcuDose-Rx automated cabinets displaced competitors in

50 hospitals last year

AcuDoseAcuDose--Rx automated cabinets Rx automated cabinets displaced competitors in displaced competitors in

50 hospitals last year50 hospitals last year


Why Do We Win?Medication Safety

“From the bedside back”

From distribution center to the bedside

Automatically scan and inventory meds on arrival

Comprehensive pharmacy automation

Nurse Station workflow and productivity tools


Presbyterian Healthcare ServicesAlbuquerque, NM

*Number of adverse drug events per 1,000 doses

Why Do We Win?Medication Safety Results

Horizon Clinicals, bar-code scanning at point of care, ROBOT-Rx, AcuDose-Rx medication cabinets, pharmaceutical distribution services

Medication errors reduced by 78%Charge capture increased up to $350,000/yrMortality index dropped from 1.2 to 0.9Harm rate* has continued to decline to current low of 0.48, within top 10th percentile nationally


CPOE system that thinks like a physician…Simple physician-friendly user interface

Evidence- and experience-based decision support capabilities

Intelligent drug dosing

Integrated medication reconciliation

Performance that supports clinician “think time”

Hospitalist-focused content

Why Do We Win?Physician Order Entry


Why Do We Win?Physician Order Entry Results

Vanderbilt University Medical CenterNashville, TN

Live on commercial version ofHorizon Expert OrdersHorizon Meds ManagerHorizon Expert Documentation

Coming soon: point-of-care bar-code medication administration

18,000+ orders entered by physicians

each day4,000+ med orders processed daily by

pharmacists


# 2 market share750+ live sites82% increase in customers in FY06

U.S. Radiology/Cardiology

PACS Market Share

Philips

Fuji

Agfa

Siemens

Emageon

Amicas

DR

Merge

All Others

2005/FY06

GE

MCK

Why Do We Win?Medical Imaging

Source: Company 10k filings, NEMA reports, McKesson estimates

PACS market ~ 35% penetrated, growing 8-10%

Accelerated adoption in community segment where McKesson is strongEarly adopters replacing legacy PACS systems

PACS market ~ 35% penetrated, growing 8-10%

Accelerated adoption in community segment where McKesson is strongEarly adopters replacing legacy PACS systems


RadiologyNo. 1 PACS in KLAS for community hospitalsEnterprise-wide imaging and information approach -- first to market with endoscopy solution

CardiologyAddresses high-revenue, high-cost area of hospitalIntegrated Imaging and hemodynamicmonitoring expedites reporting and billingLeverages McKesson’s “best practices”for staging, implementation

Why Do We Win?Medical Imaging

Top 20: KLAS Mid-Year Report Card, June 2006 © 2006 KLAS Enterprises, LLC. All rights reserved


Why Do We Win?Medical Imaging Results

13 facilities2 groups of radiologists215,000 exams per year

Reduced study expense by $280K annually and growing

More than 96% report completion within 24 hours

Reduced 3.5 clerical FTEs ($97K/yr savings)

Significantly improved physician satisfaction

Roper St. Francis HealthcareCharleston, SC


50

60

70

80

90

100

Jan Feb Mar Apr May Jun Jul Aug

Bar

codi

ng C

ompl

ianc

e %

The addition of daily scorecards results in superior performanceThe addition of daily scorecards results in superior performance

Scorecard

Daily presentation of scorecard results

Why Do We Win?Clinical Analytics


Why Do We Win?Revenue Cycle

Source: Revenue Cycle Management – Software, March 2006, www.healthcomputing.com, © 2006 KLAS Enterprises, LLC. All rights reserved

KLAS Survey Question for Vendors’ Installed Base:“Which vendors to avoid if looking for new revenue cycle solution?”

100%

50%

0%

Cerner Eclipsys McKesson

Avoidance Rate within Existing Customer Base

http://www.healthcomputing.com/


Fully integrated clinical and financial HISNo. 1 in KLAS for community hospital HISOver 2,200 community hospitals in the Paragon market

100-120 decisions per yearDecision drivers

Cost of ownershipTrue integrationDemand for advanced clinical solutions, including imaging and automation

Paragon differentiatorsAffordableContemporary, fully-integratedThe greater McKesson

Why Do We Win? Paragon is No. 1 in Small Hospitals

Top 20: KLAS Mid-Year Report Card, June 2006 © 2006 KLAS Enterprises, LLC. All rights reserved

http://monadnockhospital.org/


Why Do We Win? Leadership in the Hospital

Power of the SolutionCustomer Focus

Volume AdoptionAccelerated Time to ValueWorld Class Support


Why Do We Win?Volume Adoption

Nearly 800 clinical go-lives in FY06

500K nurses interacting with Horizon Expert Documentation

355 sites using Horizon Surgical Manager

112 sites using Horizon Care Record

Nearly 100 new medical imaging customers

Industry leadership in CPOE with hospitalists

3 million physician portal logins, nearly 100K users, including 70% physiciansMore than 200K medical errors prevented weekly


Why Do We Win?Accelerated Time to Value

1 2 3 4 5 6 7 188 9 10 11 12 13 14 15 16 17

Traditional Pharmacy AutomationPharmacy Automation

Packaging/Bar codingPackaging/Bar coding

Medication Admin at BedsideMedication Admin at Bedside

Solution Suite Medication Safety Suite

The Model

Concurrent/Stacked implementations

Pre-staged hardware and application with shrink-wrapped clinical content

Linux

Results

30-50% faster time to value

30-50% lower implementation costs

20-40% lower hardware costs


Customer Loyalty IndexCustomer Loyalty Index

FY03FY03

FY04FY04

FY05FY05

83%

80%Cases per FTE/Mo. Cases per FTE/Mo.

FY03FY03

FY04FY04

FY05FY05

96%

94%

98%

Satisfaction with SupportSatisfaction with Support

Customer View Productivity

FY03FY03 FY04FY04 FY05FY05

00

39.739.7

42.342.3

47.147.185%

6565

FY06FY06

84% FY06FY06

96% FY06FY06

Why Do We Win?World-Class Support


In the Hospital


In the Home

Why Do We Win?


Why Do We Win? Leadership In Ambulatory

Unique “Hospital Out” Strategy

The Only Complete Solution

Strategy Roadmap


Physician

Hospital

Benefits• Automate workflow• Extend patient information from the hospital• Cultivate physician relationships• Promote care team collaboration• Enable chronic disease management

BenefitsBenefits•• Automate workflowAutomate workflow•• Extend patient information from the hospitalExtend patient information from the hospital•• Cultivate physician relationshipsCultivate physician relationships•• Promote care team collaborationPromote care team collaboration•• Enable chronic disease managementEnable chronic disease management

Why Do We Win?Unique “Hospital Out” Strategy


Triad Hospitals Inc.Plano, TexasTriad Hospitals Inc.Plano, Texas

Why Do We Win?Unique “Hospital Out” Strategy

6 months later…

Ambulatory EHR initiative inked

33 practices representing 195 physician locations

Tulsa, Oklahoma - Revenue cycle outsourcing pilot

6 months later…

Ambulatory EHR initiative inked

33 practices representing 195 physician locations

Tulsa, Oklahoma - Revenue cycle outsourcing pilot


PortalsPortals

Payors & Payors & PBMsPBMs

RetailRetailRxRx



Document Imaging

Document Document ImagingImaging

AmbulatoryEHR


Transactions Solution HubTransactions Transactions Solution HubSolution Hub

Practice Management

Practice Practice ManagementManagement

Medical ImagingPACS

Medical ImagingMedical ImagingPACSPACS

Horizon Architecture Horizon Architecture (shared data, content and technology)(shared data, content and technology)


PatientsPatients

Why Do We Win?The Only Complete Solution


Duke University Health System•1,500 physicians in 80 clinics, employed and affiliated MDs

Wheaton Franciscan Healthcare•400 employed MDs in 2 states, 9 hospitals, 100 care settings

Central DuPage Hospital•100% adoption of e-prescribing among employed physicians•Extending to affiliated physicians

St. Luke’s Hospital of Kansas City•Planned deployment to 170 employed physicians and 25 affiliated

Oconee Memorial Hospital•Physician-led integrated community EHR strategy•80% of community physicians engaged



Duke University Health System•1,500 physicians in 80 clinics, employed and affiliated MDs

Wheaton Franciscan Healthcare•400 employed MDs in 2 states, 9 hospitals, 100 care settings

Central DuPage Hospital•100% adoption of e-prescribing among employed physicians•Extending to affiliated physicians

St. Luke’s Hospital of Kansas City•Planned deployment to 170 employed physicians and 25 affiliated

Oconee Memorial Hospital•Physician-led integrated community EHR strategy•80% of community physicians engaged

Nearly 4,000 physicianscontracted

in the last 180 days

Nearly Nearly 4,0004,000 physicianscontracted

in the last 180 days



FY06FY06FY07FY07

CustomerSize

Segments

ASC

Specialties

Geographies

Canada

Europe

S. & Lat. America

Asia

Solo

25 – 100 MDs

> 100 MDs

< 10 MDs

10 – 25 MDs

Govt DICM/C

Emp

Large

SA

M/C

Affl

S

NB

Small

SA

Payor

Primary Care

Multi-Specialty

Cardiology

USA

ChannelsDirectEnterpriseMed

SurgPartnerInternet VAR

Orthopedics

Surgery

OB/GYN

GI

Other “ologies”

At-Risk RCO

VAR PPM/PPC

HAC/Plus ASP Hosp Host

HAC/Plus ASP MCK Host

O/P Imaging

O/P Surgery

Products

Plus

Small Practice Integrated PM/EMR

HPC (RelayHealth)

HAC

O/P Surgery App

PPC (Medinotes)

PPM

O/P DIC App?

HAC/Plus SW Lic

RCO

Solutions

Homecare

eRx ASP MCK Hosted

PrePre--FY06FY06

Why Do We Win?Strategy Roadmap


In the Hospital


In the Home

Why Do We Win?


Leadership in the Home


Disease Management

Disease Disease ManagementManagement

EncounterManagement

EncounterEncounterManagementManagement

PatientVision

PatientPatientVisionVision

PatientKiosk

PatientPatientKioskKiosk PERSPERSPERS

HomeOffice & Hospital

-pay bills-schedule appts-check eligibility-e-visits

Patient PortalPatient Portal


Leadership in the Home


Disease Management

Disease Disease ManagementManagement

EncounterManagement

EncounterEncounterManagementManagement

PatientVision

PatientPatientVisionVision

PatientKiosk

PatientPatientKioskKiosk PERSPERSPERS

Office & Hospital Home

-pay bills-schedule appts-check eligibility-e-visits

Patient PortalPatient Portal

What has happened sinceHIMSS?

What has happened sinceWhat has happened sinceHIMSS?HIMSS?


Acquired HealthCom Partners –“Virtual Business Office”


“Consumer-friendly”• Consolidated account details updated daily• Pay multiple accounts via credit, debit

or check• Intuitive user interface• E-mail alerts to activity on account

““ConsumerConsumer--friendlyfriendly””•• Consolidated account details updated dailyConsolidated account details updated daily•• Pay multiple accounts via credit, debit Pay multiple accounts via credit, debit

or checkor check•• Intuitive user interfaceIntuitive user interface•• EE--mail alerts to activity on accountmail alerts to activity on account

Acquired HealthCom Partners –“Virtual Business Office”


Acquired RelayHealthClinical Communication - webVisit®

McKesson Ambulatory Solutions (EMR &

Practice Management)

Patient

webVisit ®

Physician Office

Payor

Reimbursement for webVisit® (via TSH)

Eligibility for webVisit(via TSH)

Hello Steve


Acquired RelayHealthClinical Communication - webVisit®

McKesson Ambulatory Solutions (EMR &

Practice Management)

Patient

webVisit ®

Physician Office

Payor

Reimbursement for webVisit® (via TSH)

Eligibility for webVisit(via TSH)

Hello Steve

A New Way to Connect Healthcare

• Online physician –patient communication• Results • Medication Renewals• Personal Health Record

A New Way to Connect HealthcareA New Way to Connect Healthcare

•• Online physician Online physician ––patient communicationpatient communication•• Results Results •• Medication RenewalsMedication Renewals•• Personal Health RecordPersonal Health Record


Why Will We Win? Leadership in the Home

Most Comprehensive Personal HealthManagement Strategy

CONNECTIVITY among physicians and care managers for secure exchange of patient information, collaboration, and care coordination

CONVENIENCE for consumers to access to routine services, medical accounts, and health records – from the convenience of home

COACHING support in for chronic care conditions through interactive personal health tools and in-home monitoring services

COMMUNICATION between patients and providers through clinical online services such as the webVisit®, optimized for use as a health plan benefit, and designed to streamline medical office workflows


Physician-to-Physician Communication

Hospitalist Package

Emergency Care Network

Why Will We Win?Connectivity


Access at convenient locationsHospital lobbyPhysician officeIn room access

Request appointments

Pre-register and check eligibility

Online account management

Why Will We Win?Convenience


webVisit

Script Renewals

®

Lab Results

Why Will We Win?Communication

PatientPatient


Home Monitoring – TelehealthImproves medication compliance Improves patient safety through daily communicationIncreases disease self-management

Personal Emergency Response System (PERS)Increases patient independence, delaying nursing home placementImproves patient communication with healthcare providersFacilitates a safe transition from the hospital to the home

Call Center SupportConsumer-centric, self-care support materialsSecure communication option for care managers and consumersManages outbound disease management campaigns24 x 7 access to care advice, nurse triage and physician referrals

Why Will We Win?Coaching


Healthcare Leadership Strategy




AmbulatoryEHR


InpatientClinicals

InpatientInpatientClinicalsClinicals

Patient Connectivity

Patient Patient ConnectivityConnectivity

CommunityHospital

PortalsPortals

PayorConnectivity

PayorPayorConnectivityConnectivity

Physician Office

Interoperability with Non-McKesson ProductsInteroperability with Non-McKesson Products


MPT – The Momentum is Strong

Healthcare leadership strategyHospitalPhysician officeHome

Swift, flexible portfolio management

“Predictable” innovation

Revenue growth increased investment and margin expansion

VolumeInstall timeProductivity


Q&A

Investor DayInvestor Day20062006


Diluted EPS Reconciliation($ and shares in millions, except EPS)

FY04 FY05 FY06

$ 643 $ (160) $ 737

Exclude: Securities Litigation charges, net - 1,200 45

Estimated income tax benefit - (390) (15) - 810 30

Income, continuing ops, excluding Securities Litigation charges $ 643 $ 650 $ 767

$ 2.18 $ 2.18 $ 2.44

299 301 316

Income (loss), continuing ops - as reported

Diluted earnings per common share, continuing ops, excluding Securities Litigation charges (1) (2)

Shares on which diluted earnings per common share were based (2)

(1) Certain computations may reflect rounding adjustments.(2) For the years ended March 31, 2006, 2005 and 2004, interest expense, net of related income taxes, of $1 million, $6 million and $6 million has been added to income from continuing operations, excluding the Securities Litigation charges, for purposes of calculating diluted earnings per share. This calculation also includes the impact of dilutive securities (stock options, convertible junior subordinated debentures and restricted stock).

mckesson corporation investor and analyst day presentation

Economy & Finance

mptqa4 investor day

fy0611 investor day

investor day2006

pharmacies10investor

projected growth

financial information

healthcare spending

op profit note