Amazing. Thank you, everyone, for joining us this morning. It's nice to see everybody here and online. I'm Elizabeth Anderson. I'm the Healthcare Services Analyst here at Evercore. I'm very pleased to be joined by Britt Vidalone, a man who needs very little introduction, EVP and CFO of McKesson. Anything you want to get off with? Otherwise, we'll jump straight into questions.

Well, first of all, thank you for having us here. Maybe what I would start with is we're really pleased with the performance that we've had so far this year. We're halfway through our year. Our second quarter results were strong. We've been consistently strong. We had 10% revenue growth in the quarter. We had adjusted operating profit growth of 26%, and we had adjusted earnings per share growth of 39%. We were able to, based on that performance and the confidence that we have in the rest of the year, raise our guidance for the full year again. We're continuing to generate really strong cash flow. I think our business is very well positioned. And so we're pleased to be able to continue this performance that we've shown now for several years, the consistent performance, consistent focus that we have. So happy to talk about whatever you'd like.

Yeah, sounds good. Maybe since somebody phrased it yesterday, this is the year of the Gs, the GLP-1s, the GPTs, that kind of thing. We'll start there. Obviously, they've been a major revenue driver for you, but not necessarily a profit driver, as you guys have pointed out. As we think about the supply and demand normalizing and the channel stabilizes, how are you thinking about the profitability of that group, particularly as those drugs start to maybe go into the oral solid stage in 2026?

So we certainly have seen continued really strong growth in GLP-1s. McKesson is a little uniquely positioned in the sense that in addition to the core distribution services that we provide, and I think we do a great job with that, very efficient job with that, we have our Rx Technology Solutions business, which provides affordability and access through prior authorization services for all the major GLP-1 brands. We have very strong relationships with the brands to provide those services. We've continued to expand those services as required and as requested by those brands. The initiation of prior authorization, the submission of a prior authorization, reporting, denial conversion, reject management. So I think we've continued, as we do with most of our access programs, to evolve those services with manufacturers as the product continues to evolve and mature. So, you know, we believe we're very well positioned for this growth. If this continues as it moves into potentially oral solids, we're well positioned both distribution and through our technology solutions to provide good services for these drugs.

No, that makes sense. Maybe switching topics slightly, you raised your fiscal 26 AOI contribution from PRISM and Florida Cancer Center to I think 280 to 320 from the prior 220 to 270. How do we think about what's driving that higher outlook and how do we think about that on a multi-year basis as you kind of complete the integration and synergy capture process?

So maybe I'll just start by saying we're really happy to continue to build out our oncology multi-specialty not only through growing our oncology platform which we believe is very strong and very well diversified but moving into vision through retina and ophthalmology with prism we haven't changed our full year guidance or year one accretion on either of those acquisitions those both happened in the first quarter of this year. We believe, continue to believe that from PRISM vision, the first year accretion will be $0.20 to $0.30, and it will grow over the next two years and onward to $0.65 to $0.75 of contribution in year three. That continues to be the guide that we've provided for PRISM. Now, PRISM is off to a really strong start. We're really pleased with the performance of PRISM. We're pleased with how we've been integrating that business. We recently completed the acquisition of Spokane iClinic and added another 27 providers. So it's off to a really good start. We believe we're performing slightly better than the acquisition case. But again, the 20 to 30 cent contribution is what we have guided for the year one.

Okay, that makes sense. And if you think about that operationally, like when you think about adding some of these new assets onto your platform. You know, you can think about it, you know, I think, as Lisa says, from the analyst side, we think about, okay, you can easily fold the acquisition of the drugs and sort of the distribution into your main network, and that comes through. But, you know, as we think about sort of the multi-year picture and the multi-year synergies, like, what comes sort of next? Like, what are some of these other, like, longer-term operational improvement drivers?

Yeah, it's a great question. So I would say that, first of all, our strategy is to look in areas and build platforms where there is drug investment, drug innovation, and increasing drug spend. Those are areas where we can build a platform, not just manage providers, not just do the drug distribution, but it's drug distribution, it's GPO services for those providers to provide better costs for the providers and the patients. It's adding on data capabilities. If you think about our oncology business, we have an ontata asset that provides data back for clinical purposes to the providers but also upstream to manufacturers as they're looking at developing their pipeline it's clinical trials and clinical trial research site management again within our oncology platform we have a very strong joint venture with Sarah Cannon research so it's building out an entire platform and we don't look to go into a therapeutic class or therapeutic area and just manage providers or just do the drug distribution. In fact, we do drug distribution and GPO services for many specialties, neurology, retinology, neurology, all specialties we do drug distribution and GPO services for. But where we're building our platforms, it's where we can drive differentiation through a platform and a suite of capabilities, which would include all the way up through clinical and commercial capabilities.

Got it. No, that makes sense. And then if you talk about those different platforms that you have across oncology and retinal and other places, like how much interchanges are between them or like, are they sort of, we should think about them as discrete platforms or they're sort of places like in some of the ontotter, you know, some of the clinical trials where you can sort of hook people up more generally and they're sort of crossover in that regard.

That's a great question i you know it's early days with our vision platform yeah certainly there's synergies from a drug distribution perspective there's certainly be some synergies from a gpo capabilities but beyond that you know we believe that though that these platforms will have unique characteristics and there are going to be research opportunities within vision care just like there are research opportunities within oncology but the management of a clinical trial the management of the of the site for those trials, the research, they may require different clinical capabilities or maybe different commercial capabilities. I think having the experience that we have with U.S. oncology and with our oncology platform will lend itself to helping us build that out. But the synergies, I think, are generally, there are general synergies, but in each of the therapeutic areas, there will be some specific unique characteristics.

Okay, that makes a ton of sense. So, you know, I think one of the questions people maybe had coming out of the investor day, just in terms of understanding the FY26 EPS bridge, you know, the guidance was raised by 30 cents despite the 80 cent beat. And I think it was just because of the timing of the investor day and the thing. It was obviously a very impressive raise, you know, one and then this one followed. So, you know, for people who are still sort of confused on that point, Like, how would you sort of view that sort of outperformance in the quarter versus sort of the guidance and then what you put through the investor day?

Yeah. So a great question. Again, if you step back to where we guided the year to begin with, we had a strong first quarter. We raised guidance then and then we did the resegmentation and we had our investor day. And at that point in time, we we certainly knew that the performance was strong. We were pleased with what we were seeing in terms of volumes, in terms of the performance, the operating leverage that we were having. And so we provided an $0.80 raise at that time at Investor Day. We thought that that was appropriate to do. The quarter finished, and the quarter finished in a strong way. And it certainly was appropriate for us to give you the right view that we had for the remainder part of the year. So I think it was really just the timing of when we provided the Investor Day update. and we're certainly pleased to be able to provide a little bit more on top of that and so you know we have raised guidance from the initial guidance at the first quarter and investor day at the end of the second quarter we feel very confident in our ability to reach this raised guidance for the full year and we're certainly pleased with the performance that we're seeing really across the business great no that's good to hear and then maybe going back to sort of the oncology and multi specialist segment should we think of it as primarily like MSO-related revenue and profit.

How do you kind of think about the mix between like the drug contribution and the growing importance of the underlying platform and other services that you're adding?

Yeah, again, if you go back to our investor day, we laid out for you as the market opportunity within oncology multi-specialty was about $115 billion. And we view the opportunity within that for distribution and GPO services to be about 80. So there's still a pretty big opportunity to grow the data and the commercial capabilities as well as the clinical capabilities. And we are seeing good growth in clinical trials and site management. The accrual rate that we're seeing for clinical trials is about 25% growth year over year. So that is reaffirming to us that we're on the right path in developing those clinical capabilities within oncology, we believe that those will also exist within our vision care platform. So the opportunity certainly is large. The distribution component of that is the lion's share of that. But within that, there's still a very big white space of opportunity for clinical and commercial capabilities.

And that makes sense, too, because I think sometimes people think of it, oh, you know, now the market is all wrapped up. Everybody's bought most of all the big players. You know, there's not much more opportunity. But what you're saying is don't think about it from that sort of, like, provider standpoint. Yes, maybe all the providers have a relationship or most of them with somebody, but it's that sort of space within it and what additional value-added services, et cetera, can you put to them?

Now, in oncology, just to step back on that for a minute, we have over 3,300 oncologists within our oncology platform today. And the growth that we've seen over the last, since 2017, is about 119%. So certainly we've seen great growth from a provider standpoint in oncology. The opportunity for us in retina and vision care is larger. We're getting started on building out that platform. Now, it's not as big a space as oncology is, but certainly we believe that there's a good runway there for provider growth as well. But as you continue to provide GPO services and more commercial and clinical services, certainly the opportunity is large for us from a white space opportunity today, and the margin profile is higher.

Yeah, no, that makes a ton of sense. And, you know, obviously there's good overlap with the core distribution business in terms of the percentage of drugs used in oncology and retinol practice. Are there any other – how do you feel about other ologies?

So we service a lot of those other specialties today from a drug distribution perspective. And we believe that that's an important part of the oncology multi-specialty space from a distribution perspective. What we're looking to do, though, when we make an investment to build out a platform is we're looking for more. It certainly starts with pharmaceutical distribution because that's what we're really, really good at. It's building the capabilities around GPO, which we think will provide better cost opportunities for providers and their patients. And then we're looking for those broader commercial and clinical opportunities to round out a platform. We don't want to just manage providers. We think having a broad base of diversified capabilities is important.

That makes sense. And, you know, the policy environment has been volatile, I think it's fair to say, this year. But you guys have operated successfully in a variety of policy environments. as we sort of think about a couple of things that have maybe come up this week, one on sort of anything that might change on sort of whack pricing or gross to net. I know we've been through this conversation before, but for people who are maybe newer to the story or not as in the weeds, could you maybe talk about that and why you're probably, I'm guessing, not too worried about that?

Yeah, it's an important question, and I certainly appreciate that. Look, when we distribute products on behalf of biopharma, What we do on a constant basis is work with our partners to understand what services they need on behalf of those products. That could be core distribution services, that could be special handling, it could be cold chain, it could be a variety of other types of services. And those services also could change with a manufacturer. They introduce new products, they have changes to what is needed for those products, the different channels or different services. So we're constantly having these conversations with manufacturers to make sure that the fees that they're paying us for the services that we're providing fairly reflect the services that we're providing back to them. And that's an ongoing conversation. And so whether a whack price of a drug is $1,000 or $100, if the services we provide are the same, we expect to be paid fairly for those services regardless of what the price of the drug is.

Okay, that makes sense. And maybe one other sort of relatively newer policy announcement. There are some new demonstration programs that CMMI has run in Globe, etc. How would you sort of think about those? You know, I think the policies are still under development, so it's a little bit of an unfair question at this point, and sort of the answer is TBD, clearly. But, you know, is there anything that you would point out that, you know, you think of as a positive or potentially a future headwind in how we currently understand some of those programs?

Yeah, I think these are early days. To your point, it's hard for me to really speculate on that. There are demonstrations and pilots, and we'll learn from that. I don't feel negative or positive about it, to be honest with you. I think we're well positioned for whatever comes out of those pilots, and we'll be in a really good spot regardless of how those pilots turn out, and we'll learn from it.

Okay, that's fair enough. You know, at the Investor Day, you started, you highlighted some of the migration to cloud and AI-powered logistics. You know, are there sort of specific margin or profit-level improvements that you expect from these digital innovations? And obviously within the context of your overall algorithm, but, you know, how do you see that playing out?

Yeah, so I think there's, this is a really good question, and it's one that we've spent a lot of time on as a company, really figuring out how we continue to modernize our operations. And that comes in in many different forms. It comes in the forms of just automating your back office, providing automation to your distribution and your distribution network. It comes in providing better tools and services for your customers. It could be automation tools within a call center. So we have been really focused on automating and modernizing the entire operation. In the case of a distribution center network, as an example, we're putting more automation in. That will drive, in the case of new DCs that we put in place, 90% of what happens in a DC now is automated. So that drives significant leverage, significant efficiency. We're also putting in automation in some of our call centers. We're doing AI-assisted agents that are helping drive more efficiency within our call centers. We're driving products within our oncology platform, which is helping providers free up more time and capacity by giving them things like ambient scribe capabilities or helping them take notes and put those into large language models that provide more efficiency for them. You know, there are certain things that we're doing in the back office to take hands off keyboards and make that more automated. So I think we're really focused on this. It has been part of some of the operating leverage that we've already seen to date. We've talked about at Investor Day, I talked about over the last five to six years, we've seen about 1,200 basis points of operating leverage. Operating leverage measured as operating expenses as a percentage of gross profit. And in our second quarter results, we talked about year over year operating leverage of over 500 basis points. So we believe that continuing to automate and modernize the business, making investments to do that is going to drive more efficiency, but it's also going to drive greater customer centricity, particularly in the platforms that we're building around oncology and retina yeah that makes sense um maybe switching over to the medical business obviously you've talked about the the separation timeline and it being largely tax-free can you walk us through the milestones and sort of where you are in terms of you know you've talked about the capital structure and the carve-out audits and the targeted completion date yeah so first of all i mean we made the decision to separate our medical business because we believe that it's a great business, the great franchises perform very well for a number of years, very well positioned across all of the alternate site channels, and we believe that separating this is going to free it up to go after its own strategies with its own capital structure, and it's going to generate more value both for the med-surg business, but also increase the focus for the McKesson parent business so what we're really focused on right now is some of the mechanics getting TSAs in place to help the business be more independent and we have completed carve-out audits those are obviously time-consuming but necessary aspects and so that is taking up a lot of the work today we are we're well positioned on that I think that we have done a great job cross-functionally to do that, and I think we're right on track as where we would have expected to be. So we're pleased with that. The business is very focused. We have talked about doing a tax-free separation, targeting an IPO sometime in the second quarter or second half of fiscal 27, depending on, you know, how the markets play out at that point in time. It's obviously too soon to determine how that will look, but we've done this before. I think that's the other important thing to point out here. We really focus on managing our portfolio. We have a very focused strategy. We want our businesses to be on that strategy. We've separated businesses before that again we think are good for those businesses that have added higher return and more focused capital to the McKesson parent. We did that with Change Healthcare. We did that with our European asset. We did that last year with Rexall and our Canadian business. Again, good businesses that we felt like that allocating that capital back to the core strategies was more effective. And what we've seen over time is continued growth within McKesson. We've seen continued cashflow growth and we've seen increasing levels of return on invested capital. So this is a play that we will continue to use to focus our portfolio on the places where we have clear differentiation. So that's where we are in the process. I'm certainly pleased with the work that we've seen, the TSA work that we've done, certainly the carve-out audits, and being prepared to be an independent company.

That makes sense. And maybe just to think about that as an independent business for a moment, You know, given the private label penetration, what impact from tariffs or import cost inflation are you seeing? I know you have a pretty nimble strategy in terms of how you work with your private label partners. So if you wouldn't mind telling us a little bit more about how that's going.

Yes, the private label aspect of the medical surgical business, the McKesson brand, has been great for the business, but it's also been great for our customers. We work with a number of suppliers across dozens of countries, and we're continuing to focus on this surety of supply and having a diversity of supply, and we think that that's worked very well for us. We've managed tariffs, I think, pretty effectively. It has not had an impact on the business, the tariffs specifically. And so McKesson brand and continuing to expand McKesson brand and continue to expand our private label in the areas that will drive the most value for our customers is, again, something that we have done very routinely over the last several years. And it'll be an important part of the strategy going forward.

OK, makes sense. You know, I think one of the things people have been very concentrated or focused on the biosimilar opportunity. Maybe thinking about sort of the core generics portfolio, you have great cost leadership in Claris One and some of your strategic customer onboarding. How do we think of that as a profit lever going forward, particularly as that generic wave picks up again at the end of the decade?

Yeah, so generics are certainly an important part of what a full-line wholesaler provides to its customers. And so it's an important part of what our customers need. It's an important part of our business. And having a focused sourcing engine like Claris One and really solves that challenge for our customers. We believe that we have a very scaled sourcing engine at Claris One. We believe we source as well as anybody in the marketplace. We focus on surety of supply, high service levels, as well as low cost for our customers. And from McKesson perspective, we focus on generating a spread. Again, high service levels, high availability of supply, low cost for customers, and generating a spread for McKesson. We've done that very well now for really almost 10 years at Claris One with Walmart, and we're very pleased with the results of that business. And, again, generics will continue to be an important part of the business. Certainly the growth that we've seen in specialty, the growth that you're seeing in oncology, the growth that you're seeing in immunology is higher than any other category that's out there. So that has become an increasing part of the portfolio that McKesson provides to customers. But generics will always continue to be an important product capability for McKesson to provide good service, good low cost.

Yep. No, that makes sense. Can you talk about also, I think, post some of the drama in generic pricing in the early 2010s, You guys changed your model around generics and sort of the sensitivity to generic pricing, I believe. Can you talk about that? And is it sort of people should think about it, maybe focus more on sort of the overall, to your point, it's a lower growth driver than specialty, but sort of think about it as more just a function of the increased economics from those conversions and growth and not necessarily like the change in price within a generic basket. Is that fair to say?

So you mentioned drama. We certainly had less stability for a period of time in the middle of the decade. We have seen good stability in the marketplace, competitive, but certainly a stable marketplace. What we focus on is we focus on earning an appropriate economic value for each product category that we provide services for on behalf of the manufacturer and to our customers. We reflect that value in the price that we charge our customers. So I think it's important that we're very thoughtful about being diverse across the customer base, diverse across the manufacturer base, and reflecting an appropriate fair value for our services in our price. Now, as you think about managing generics, there's a lot of discussion at what I would call a composite level. So there's a lot of focus on there's more deflation, there's less deflation, there's more inflation. That's not how we manage the business. You know, inside a basket of generics that a customer may buy from us or that we provide services for, there are thousands of generics. We manage each one of those. Each one of those has different characteristics. There could be two suppliers on a generic, could be eight suppliers on a generic. The API is different within the formulation of that molecule. And all of those will generate different levels of cost, different levels of inflation or deflation. We manage every one of those, and we manage every one of those for high supply as well as low cost for our customers and creating a spread. So we don't really focus on the composite generic basket. We focus on each individual molecule because that's how our customers buy them from us. And by doing that, I think we've been very efficient, very effective at creating that low cost for our customers as well as a good spread for Warwick-Equesson.

Yep. Okay. That's a helpful distinction. Thank you. Maybe turning to RxTS, you've had a very, that's obviously been a very successful growth driver of the business as well. If we look at the AOI guidance now, 13% to 17% versus originally 9% to 13%. How do we think about the drivers and the contributors to that outperformance?

It's a business that has performed very well now for several years. And if you think about our long-term target for this business, we see continued growth over the next several years. When you think about this business, there are really three key buckets that I would put it in. First of all, we have a set of 3PL capabilities and services that we provide. That represents roughly 50% of the revenue of the segment. Those are distribution margin-like margins that are contributing around less than 5% of the profit of the segment. So those are important. We're certainly seeing a lot of innovation and growth opportunities within 3PL services, but different from the other half of the business, which is more technology-focused on providing access and affordability solutions. So they represent really the other half of the revenue. Within that, if you think about our access solutions, the flagship within that are the prior authorization services. Certainly GLP-1s, we have relationships and provide services for all the major brands, but also for other specialty brands, many specialty brands. And as a manufacturer's product is maturing or the needs for that product change over time, the services that we provide within that are also going to change and that provides an opportunity for us to to continue to invest and extend those services and then there are a set of affordability programs think about e voucher or discount cards or those types of capabilities so it's a business that we've seen good growth certainly GLP ones have been a part of that but we're continuing to grow the the relationships and new product wins that we're having providing on both the affordability and the access solution side.

Okay, that makes sense. And maybe digging into a couple of the things you said there, it seems like there have been some market shifts and maybe share shifts in the 3PL landscape over the last couple of years. If you look at the landscape now, where are the incremental opportunities for McKesson?

Yeah, so it's a business that we think we run very efficiently. If you think about 3PL services, There's probably three buckets that you can look at this in. There's the established pharma players that are looking for services that may require more specialized or advanced capabilities and advanced logistics. There's certainly the more emerging players, emerging biopharma players who are looking for a higher level of capabilities. Could be logistics, could be advanced handling and services. And then I think there's also now cell and gene. And certainly in cell and gene, there's more emerging opportunities, more products come into market. And we have a business called InspiroGene that is designed to handle those types of services for cell and gene. We've just launched and built a new distribution center within our 3PL business itself for cell and gene capabilities. So we're excited about that. There's more innovation. There's more growth and opportunity within 3PL, within cell and gene that's going to drive potentially more opportunity for McKesson.

Okay, that makes sense. And if we think about the rise in cash pay prescriptions with GLP-1s, those are obviously outside of traditional channels and, by definition, cash pay, and so don't necessarily go through sort of prior authorization. Should investors be worried about that as a potential headwind to the GLP-1 sort of contribution to the RXTS business and the prior authorization business? Why or why not, would you say?

Well, first of all, I think that cash pay is pretty small today. It could grow certainly over time. I think we already provide a lot of services for cash pay. We're already providing some services for some of these direct programs today. So, you know, I think that plays right into the capabilities that RXTS has. So I think that we'll see how this, if it becomes more material, that could be more opportunity for us. Just given the unique capabilities that we have within RXTS as an enabler. And so I don't worry about it. I view this as something that we will continue to monitor and watch. But, again, given the capabilities and services that we have, it could represent an opportunity for us. And we're already providing some of those services, enabling services on behalf of some of these direct models today.

Yeah, that was going to be my next question, sort of looking at some of these direct models that we've seen. You guys provide core distribution services to them and are part of that growth wave more generally. What are some of the, you know, should we think of those as sort of like, you know, small but high-growing regular distribution partner, you know, channel partner partners? Or are we thinking about these as, you know, something else to your point about maybe there's additional ways that you can serve them with services or what have you?

So first of all, if you think about these direct-to-consumer models, there is this core distribution behind that. And so there's providers that need distributors like a McKesson to provide some of those core distribution services. In addition to that, maybe I would point out three things. We already have capabilities around distribution outside of that. Centrophil is a service within our Cover My Meds business where we can deliver medications to a patient's home or to their state of pharmacy directly. We have specialty pharmacy capabilities with Biologics by McKesson where, again, we can service oncology and rare disease specialty pharmacy medications. And, again, those can be delivered directly to a patient's home with the support for those medications. And then the third thing I would say is we have some pharmacy services where within CoverMyMeds, again today we are working with some of these branded portals to help provide a seamless integration of the intake the fulfillment and the dispensing of those prescriptions today so we have unique assets both on the general distribution some of the central field distribution as well as the specialty pharmacy capabilities within biologics and then as I mentioned some of these pharmacy dispensing capabilities got it no that makes sense um maybe it's the you know the business is obviously to your point before you know seeing outsized growth in specialty and oncology if we think about the business from a cash flow perspective because it's always generated very strong for cash flow negative work capital that part can you talk about the differences in the cash flow cycle for the specialty and oncology providers versus what we think of as maybe some of the traditional pharmacy distribution well there's an aspect that's very similar and that is a lot of that business is pharma distribution yeah and so it takes advantage of the scaled network that we have the efficiency that we have around our working capital so there's I think there's different aspects where there's the distribution and the efficiency that we have within the distribution network there's the more direct management of payers and providers it's kind of a

different certainly set of cash conversion metrics and then within the technology business a very efficient cash flow driven business as well you just look historically the cash flow conversion for this business has been high it's been very consistent and we anticipate that that will continue going forward okay so we shouldn't think of any broad shifts in that and then as you sort of we think about that strong contribution obviously you've been investing a lot of them and so platforms and our XTS how do you kind of see the evolution of that continuing over the next couple of years like what what's most interesting to you at this point? You obviously talked about some of the platform adds to the MSOs. Anything else that sort of comes up that you think is very complementary to the core business?

I think the opportunities that we have in automating the business, modernizing the business, some of the AI capabilities that we are already implementing and using, those are going to make not only a more efficient business, but again, some of these customer-centric solutions that we have, particularly as they relate to our providers, I think is going to be really a great opportunity for Continuing to invest in RXTs to add extensions to the capabilities that we have today. We talk about the investments that we expect to have in the second half of the year, an increased level of investment. That's a normal level of investment that we have in the business. We believe that adding these additional services like reporting and denial conversion and some of the affordability programs that continues to widen the moat that we already have with these differentiated assets. So I think it comes on two fronts. It's product extensions, it's automating some of the aspects of the distribution network, and it's providing some more automated solutions that are more customer-centric, provider-centric.

Got it. And should we be thinking of those as a mix between sort of either vendors that you're just working with or your own internal investments and M&A? Do you have a view on do you need to own the AI solution or can you partner?

We are partnering with a lot of these large companies today and certainly they're providing some leverage for us with their tools.

That makes sense. If we think about it, maybe one slightly off-ball conversation. It struck me at the investor day that you talked about when you first walked in and saw Brian and it's been a very successful partnership over the last several several decades what do you think it is about 20 years yeah exactly um what do you think it is about your relationship or sort of how you two work together that enables that successful partnership to have lasted for so long yeah you know i think generally speaking we have um we think about business in a very similar way not exactly obviously uh but uh we're very focused on strategy you know he is a strategist by heart yeah um so i've learned a lot from him over the years from that aspect we're very focused or very focused so strategy is

important making sure that we're focused on that strategy if you think about our strategy it is our four pillars yeah and those four pillars have been pretty consistent as well so I think we we see the business in a very similar way not exactly and I think that's good to be honest with you we have a very good open communication and dialogue and we've gone through a lot of experiences together. So you talked about what happened during the 2010s in the pharma landscape. We were both in the pharma business at that point in time. So I think the shared experiences, the shared views, the shared focus, all of those have made really a good relationship.

Got it. And I hate to end on a short-term question, but your business obviously has very nice long-term stable dynamics.

But anything you want to point out on seasonality that you think would be important for investors just as we get through the year yeah so again it's a very big and diversified business still and so you will see some variations from quarter to quarter we try to pull those out and call those out for you you know tax rate is certainly one of those the mix of of our profits and where they come from impacts that as well as the timing of discrete items that is will generate variability from quarter to quarter as we think about the second half of our year there are a couple of things discrete things that I could call out last year we divested our Canadian business that business sits within our North American pharmaceutical segment today there was a held for sale accounting benefit last year of roughly 15 cents so we're certainly lapping that aspect of it.

In which quarter can you just remind people?

That was in the third quarter certainly I talked about the tax rate as we think about the second half of the year we have increased our tax rate for the full year to 18 to 19 percent and we've given a range of 23 to 25 percent for the third quarter specifically again try to give you as as much information again knowing that the mix of business and the timing of discreets could still impact that and i would remind you as i just mentioned the investments that we're making in our rxts business we anticipate those to be higher in the second half of our fiscal year than they were in the first half of the year and then just generally speaking the business does still have variations from quarter to quarter there could be seasonality impacts from the illness season we've seen a week on the season through the first half of the year weaker than we had anticipated weaker than we've seen over the last five illness seasons and then the business just generally will have and has seen variations from quarter to quarter we are very confident in the full year guide that we've provided. The fact that we have been able to raise that guidance with performance through the first half of the year, we are very confident in the guidance that we've provided of $38.35 to $38.85. That represents 16-18% growth over the prior year. And when you exclude the venture gain that we had last year, that's 18-20% operating profit growth. So we are, again, we're very confident in the full year. There could be variations from quarter to quarter. But again, this is another strong year for McKesson.

That makes sense. And just to just put a point on the illnesses and comment, we should think about that as impacting the core North American distribution business. Is that where most of that sort of, not that that's a huge percentage of the overall business or by any stretch of the imagination, but just in terms of thinking about the impact.

So there's two places that that will impact. Certainly the medical business itself. So there's the illness season in the medical business has been weak now for a couple of years. So there's the aspect of just the illness season impact to medical as well as it does have some of a pull-through impact. You're seeing less illness. You may have less incidents to go see your doctor. It's going to drive through less medical supply. So that has impacted that segment much more impactfully. There is an illness season impact in our pharma business. It's just a smaller impact given the size of that segment.

Okay, that's fair. Well, thank you very much, Brett. It was a pleasure.