On October 30, 2019 McKesson Corporation (NYSE:MCK) reported results for the second quarter ended September 30, 2019 (Press release, McKesson, OCT 30, 2019, View Source [SID1234550055]).

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Represents continuing operations attributable to McKesson

Represents a non-GAAP financial measure; refer to the reconciliations of non-GAAP financial measures included in accompanying schedules

"McKesson’s second-quarter results reflect continued momentum across the business as well as further progress against our cost savings initiatives," said Brian Tyler, chief executive officer. "As we look forward to the second half of our fiscal year, we remain confident in the strength of our broad set of solutions and capabilities, delivering execution against our strategic imperatives as we become a more focused and efficient organization."

Revenues increased 9% year-over-year, primarily driven by growth in the U.S. Pharmaceutical and Specialty Solutions segment, largely due to branded pharmaceutical price increases and higher volumes from a retail national account customer.

Loss per diluted share of $(3.99) included charges of approximately $1.4 billion, or $5.73 per diluted share, primarily related to an impairment in connection with McKesson’s planned exit of its investment in Change Healthcare. Adjusted Earnings per diluted share of $3.60 was flat year-over-year, as a lower share count and growth in the Medical-Surgical and McKesson Prescription Technology Solutions (MRxTS) businesses were offset primarily by the lapping of a prior year pre-tax benefit of $90 million, or $0.33 per diluted share, related to a reversal of a contractual liability associated with McKesson’s investment in Change Healthcare. Excluding the prior year benefit of $0.33 per diluted share from Adjusted Earnings, second-quarter results per diluted share increased 10%.

During the first half of the fiscal year, McKesson returned $1.6 billion of cash to shareholders via $1.4 billion of common stock repurchases and $148 million of dividend payments. For the first half of the fiscal year, McKesson used cash from operations of $159 million, and invested $184 million internally, resulting in negative free cash flow of $343 million.

U.S. Pharmaceutical and Specialty Solutions Segment

Revenues were $46.0 billion, up 10%, driven primarily by branded pharmaceutical price increases and increased specialty pharmaceutical volume from the company’s largest retail national account customer, partially offset by branded to generic conversions.
Operating profit was $639 million and operating margin was 1.39%. Adjusted operating profit was $641 million, up 1%, due to continued growth in the specialty businesses, partially offset by customer and product mix. Adjusted operating margin was 1.39%, down 14 basis points, primarily resulting from the higher volume of specialty pharmaceuticals.
European Pharmaceutical Solutions Segment

Revenues were $6.6 billion, down 1% on a reported basis and up 4% on an FX-adjusted basis, driven primarily by growth in the pharmaceutical distribution business.
Operating profit was $1 million and operating margin was 0.02%. Adjusted operating profit was $41 million, down 23%, and adjusted operating margin was 0.62%. On an FX-adjusted basis, adjusted operating profit was $43 million, down 19%, and adjusted operating margin was 0.62%, down 18 basis points, driven by the challenging retail pharmacy environment in the U.K.
Medical-Surgical Solutions Segment

Revenues were $2.1 billion, up 6%, driven primarily by growth in the Primary Care business, largely due to the increase in volume of pharmaceutical products.
Operating profit was $129 million and operating margin was 6.27%. Adjusted operating profit was $166 million, up 20%, and adjusted operating margin was 8.07%, up 99 basis points. The year-over-year growth primarily reflects growth in the Primary Care business and the lapping of bad debt expense in the prior year.
Other remaining businesses

Revenues were $3.0 billion, up 4% on a reported basis and up 5% on an FX-adjusted basis, driven by growth in the Canadian and MRxTS businesses.
Operating loss was $(1.3) billion driven by charges of approximately $1.4 billion, primarily related to an impairment in connection with McKesson’s planned exit of its investment in Change Healthcare. Adjusted operating profit was $221 million, down 26% on both a reported and FX-adjusted basis, primarily due to the lapping of the $90 million contractual liability reversal in the prior year and lower contribution from the company’s investment in Change Healthcare, partially offset by higher volumes in the MRxTS business.
Company Updates

On October 21, 2019, the company announced an agreement in principle to settle all claims against the company in the first track of the multi-district opioid litigation, related to two Ohio counties. As a result, McKesson recorded a pre-tax charge of $82 million within operating expenses for the second quarter of fiscal 2020.
McKesson recently published its FY19 Corporate Responsibility Report, describing how the company continues to work to use its economic, environmental, social and governance resources thoughtfully and responsibly. This global report puts emphasis on three topics: product quality and patient safety; eco-efficient transportation and operations; and better health for employees and communities.
McKesson opened a new distribution center in the Seattle area, an eco-friendly facility featuring the latest in supply chain technology and state-of-the-art automation.
Maria Martinez joined McKesson’s Board of Directors as a new independent director effective October 18, 2019.
Fiscal 2020 Outlook

McKesson reaffirmed fiscal 2020 Adjusted Earnings per diluted share guidance range of $14.00 – $14.60.
Conference Call Details

The company has scheduled a conference call for today, Wednesday, October 30th, at 8:00 AM ET to discuss the company’s financial results. A live audio webcast of the conference call will be available on McKesson’s Investor Relations website at View Source The conference call can also be accessed by dialing 786-815-8297. The password is ‘McKesson’. A telephonic replay of this conference call will be available for 14 calendar days. For individuals wishing to listen to the replay, the dial-in number is 404-537-3406 and the pass code is 6206708. An archive of the conference call will also be available on the company’s Investor Relations website at View Source

Upcoming Investor Events

McKesson management will be participating in the following investor conference:

38th Annual J.P. Morgan Healthcare Conference, January 13-16, 2020, in San Francisco, CA.
Audio webcasts will be available live and archived on the company’s Investor Relations website at View Source A complete listing of upcoming events for the investment community is available on the company’s Investor Relations website.

Adjusted Earnings

McKesson separately reports financial results on the basis of Adjusted Earnings. Adjusted Earnings is a non-GAAP financial measure defined as GAAP income from continuing operations, excluding amortization of acquisition-related intangible assets, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment and related charges, and other adjustments as well as the related income tax effects for each of these items, as applicable. A reconciliation of McKesson’s GAAP financial results to Adjusted Earnings is provided in Schedules 2 and 3 of the financial statement tables included with this release.

The company does not provide forward-looking guidance on a GAAP basis prospectively as McKesson is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure, without unreasonable effort, because McKesson cannot reliably forecast LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment and related charges, and other adjustments, which are difficult to predict and estimate. These items are inherently uncertain and depend on various factors, many of which are beyond the company’s control, and as such, any associated estimate and its impact on GAAP performance could vary materially.

FX-Adjusted

McKesson also presents its financial results on an FX-adjusted basis. The company conducts business worldwide in local currencies, including the Euro, British pound and Canadian dollar. As a result, the comparability of the financial results reported in U.S. dollars can be affected by changes in foreign currency exchange rates. FX-adjusted information is presented to provide a framework for assessing how the company’s business performed excluding the effect of foreign currency exchange rate fluctuations. The supplemental FX-adjusted information of the company’s GAAP financial results and Adjusted Earnings (Non-GAAP) is provided in Schedule 3 of the financial statement tables included with this release.

Free Cash Flow

McKesson also provides free cash flow, a non-GAAP measure. Free cash flow is defined as net cash provided by (used in) operating activities less payments for property, plant and equipment and capitalized software expenditures, as outlined in the company’s condensed consolidated statements of cash flows.

On October 30, 2019 Diplomat Pharmacy, Inc. (NYSE: DPLO) reported that it will release its third-quarter 2019 operating results before market open Tuesday, Nov. 12. A conference call and live webcast will be held at 8:30 a.m. ET (Press release, Diplomat Speciality Pharmacy, OCT 30, 2019, View Source [SID1234550071]).

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Shareholders and interested participants can listen to a live broadcast by calling 833.286.5805 (647.689.4450 for international callers) and entering participation code 4382088, about 15 minutes before the call. A live webcast of the conference call will be available on the investor relations section of Diplomat’s website at ir.diplomat.is. The site will host an audio recording and supplemental investor information for 90 days.

On October 30, 2019 Sangamo Therapeutics, Inc. (Nasdaq: SGMO), a genomic medicine company, reported that the Company has scheduled the release of its third quarter 2019 financial results after the market closes on Wednesday, November 6, 2019 (Press release, Sangamo Therapeutics, OCT 30, 2019, View Source [SID1234550131]). The press release will be followed by a conference call at 5:00 p.m. ET, which will be open to the public via telephone and webcast. During the conference call, the Company will review its financial results and provide a business update.

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The conference call dial-in numbers are (877) 377-7553 for domestic callers and (678) 894-3968 for international callers. The conference ID number for the call is 7276749. Participants may access the live webcast via a link on the Sangamo Therapeutics website in the Investors and Media section under Events and Presentations. A conference call replay will be available for one week following the conference call. The conference call replay numbers for domestic and international callers are (855) 859-2056 and (404) 537-3406, respectively. The conference ID number for the replay is 7276749.

On October 30, 2019 Kura Oncology, Inc. (Nasdaq: KURA), a clinical-stage biopharmaceutical company focused on the development of precision medicines for the treatment of cancer, reported that it will report third quarter 2019 financial results after the close of U.S. financial markets on Tuesday, November 5, 2019 (Press release, Kura Oncology, OCT 30, 2019, View Source [SID1234550017]). Kura’s management will host a webcast and conference call at 4:30 p.m. ET / 1:30 p.m. PT that day to discuss the financial results and provide a corporate update.

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The live call may be accessed by dialing 877-516-3514 for domestic callers and 281-973-6129 for international callers and entering the conference code: 5159117. A live webcast and archive of the call will be available online from the investor relations section of the company website at www.kuraoncology.com.

On October 30, 2019 Kaleido Biosciences, Inc. (Nasdaq: KLDO), a clinical-stage healthcare company with a chemistry-driven approach to leveraging the microbiome organ to treat disease and improve human health, reported financial results for the third quarter ended September 30, 2019, and provided a corporate update (Press release, Kaleido Biosciences, OCT 30, 2019, View Source [SID1234550040]).

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"Over the last two years we have invested in building our platform, including expanding our library of more than 1,500 MMTs and manufacturing capabilities. We have made important progress across the business, and today we have four ongoing clinical studies with three MMTs in three different patient populations, and presented encouraging data from a fifth study at the SSIEM meeting last month. We are also leveraging collaborations to advance our understanding of the potential of our MMTs in promising areas of health and disease where the microbiome is implicated, such as immuno-oncology," said Alison Lawton, President and Chief Executive Officer of Kaleido. "We are focusing our resources on our current pipeline, executing against key clinical milestones while optimizing our operational efficiencies to extend our cash runway. We anticipate results from our studies of KB174, including in patients with cirrhosis, during Q4 2019, and next year from our KB109 multi-drug resistant pathogens program and Phase 2 trial of KB195 in patients with urea cycle disorders."

Corporate Update and Anticipated Milestones

Dosing is underway in the Phase 2 trial (UNLOCKED) designed to evaluate KB195 in 18-24 patients with urea cycle disorders (UCD). Kaleido, in consultation with study investigators who are leaders in the clinical management of UCD patients, has elected to adjust the primary endpoint for this study in a rare orphan disease population to a within-patient responder analysis of the proportion of patients with ≥15 percent decrease in fasting plasma ammonia. The original primary endpoint, 24-hour area under the curve plasma ammonia, will be measured as a secondary endpoint. The Phase 2 trial was initiated approximately 24 months after conducting the first ex vivo screening, and data are expected in mid-2020.

Results from two clinical studies for Kaleido’s hepatic encephalopathy program evaluating KB174 in patients with well-compensated cirrhosis and in healthy volunteers are expected during Q4 2019.

Enrollment continues in the clinical study (VITORA) assessing KB109 in patients colonized with multi-drug resistant pathogens, and data are anticipated in mid-2020.

Kaleido is undertaking measures to focus resources on its pipeline programs, enhance operational efficiencies and extend its cash by approximately a quarter with runway into Q4 2020. This includes decreasing manufacturing and other external costs as well as reducing headcount by approximately 25 percent.
Recent Highlights

Entered into a research collaboration with Jeffrey Gordon, M.D., Director of the Edison Family Center for Genome Sciences and Systems Biology at Washington University School of Medicine, to explore the influence of MMTs on microbial and host physiology and metabolism.

Announced a collaboration with Gustave Roussy, the largest cancer treatment center in Europe, to identify and characterize MMT candidates with the potential to improve cancer immunotherapy efficacy; the research program is aimed at increasing the number of patients who respond to inhibitors of immune checkpoints by changing their microbiome composition and metabolic output.

Presented data at the annual Society for the Study of Inborn Errors of Metabolism Symposium (SSIEM) from a clinical study of KB195 in patients with UCD which demonstrated safety and tolerability and potential for effect on nitrogen metabolism, a biomarker of ammonia production.

Presented at IDWeek 2019 ex vivo data showing that KB109 reduced the relative abundance of multi-drug resistant pathogens in microbiome samples from two different populations at high risk for infection, patients in the intensive care unit who had received broad-spectrum antibiotics and patients with end-stage liver disease.

Presented ex vivo and in vivo data demonstrating the ability of MMTs to reduce toxic side effects of chemotherapy through multiple mechanisms at the Keystone Symposia on the Microbiome: Therapeutic Implications.
Third Quarter 2019 Financial Results

For the third quarter ended September 30, 2019, Kaleido reported a net loss of $22.0 million, or $0.74 per common share, compared to $17.4 million, or $3.38 per common share for the third quarter ended September 30, 2018.

In the third quarter of 2019, Kaleido invested $16.2 million in research and development (R&D) related to advancing its product pipeline, as compared to $10.2 million in the third quarter of 2018. This year-over-year increase was driven primarily by incremental R&D spending for KB195, including the Company’s Phase 2 clinical trial and external manufacturing. Additional incremental spend year-over-year related to ongoing clinical studies, including two clinical studies for Kaleido’s hepatic encephalopathy program evaluating KB174, and the VITORA clinical study of KB109 in multi-drug resistant pathogens.

General and administrative (G&A) expenses were $5.9 million during the third quarter of 2019, as compared to $7.1 million for the third quarter of 2018. This year-over-year decrease was driven primarily by lower stock-based compensation costs related to G&A.

Included in net loss was non-cash stock-based compensation expenses of $2.9 million for the third quarter of 2019, as compared to $3.8 million in the third quarter of 2018.

As of September 30, 2019, the Company reported cash and cash equivalents of $81.3 million.

About Microbiome Metabolic Therapies (MMT)

Kaleido’s Microbiome Metabolic Therapies, or MMTs, are designed to drive the function and distribution of the microbiome organ’s existing microbes in order to decrease or increase the production of metabolites, or to advantage or disadvantage certain bacteria in the microbiome community. The Company’s initial MMT candidates are targeted glycans that are orally administered, have limited systemic exposure, and are selectively metabolized by enzymes in the microbiome. Kaleido utilizes its human-centric discovery and development platform to study MMTs in microbiome samples in an ex vivo setting, followed by advancing MMT candidates rapidly into clinical studies in healthy subjects and patients. These human clinical studies are conducted under regulations supporting research with food, evaluating safety, tolerability and potential markers of effect. For MMT candidates that are further developed as therapeutics, the Company conducts clinical trials under an Investigational New Drug (IND) or regulatory equivalent outside the U.S., and in Phase 2 or later development.