On October 25, 2018 Novocure (NASDAQ: NVCR) reported financial results for the three and nine months ended September 30, 2018 (Press release, NovoCure, OCT 25, 2018, View Source [SID1234530195]). The company highlighted continued revenue growth supported by commercial momentum in newly diagnosed GBM and continued clinical development progress.

(1) An "active patient" is a patient who is on Optune under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days.
(2) A "prescription received" is a commercial order for Optune that is received from a physician certified to treat patients with Optune for a patient not previously on Optune. Orders to renew or extend treatment are not included in this total.

"We delivered record quarterly revenue of $64.8 million in the third quarter, representing 5% quarter-over-quarter growth, driven by both active patient growth and ongoing improvements in our gross-to-net spread," said Asaf Danziger, Novocure’s Chief Executive Officer. "Prescriptions for patients with newly diagnosed GBM continued to grow, reflecting increased demand from radiation oncologists and neurosurgeons in our global active markets. We also finalized a strategic collaboration with Zai Lab which enables commercial access to China and establishes a development partnership intended to progress Tumor Treating Fields in multiple solid tumor indications."

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"In September, we presented final data from our STELLAR trial and have now submitted an HDE application to the FDA in malignant pleural mesothelioma (MPM), which we believe brings us one step closer to our first indication outside of the brain," said William Doyle, Novocure’s Executive Chairman. "We continue to increase our investments in research and development with three ongoing phase 3 pivotal trials creating the potential for multiple interim or final data readouts within the next three years."

"Novocure is a global oncology company with a proprietary platform therapy, an established commercial business and significant upside potential from an advancing pipeline in multiple indications," continued Mr. Doyle. "With net cash flow from operating activities of $5.6 million during the quarter and more than $227 million in cash, cash equivalents and short-term investments on hand at the end of the third quarter, we believe we are in a position of strength to continue to execute our strategic plan."

Third quarter 2018 operating statistics and financial update

There were 2,252 active patients on Optune at September 30, 2018, representing 34 percent growth versus September 30, 2017, and 4 percent growth versus June 30, 2018. The increase in active patients was driven by increased commercial adoption and by continued growth in prescriptions for patients with newly diagnosed GBM, who typically have a longer duration of treatment with Optune.

In the United States, there were 1,602 active patients on Optune at September 30, 2018, representing 30 percent growth versus September 30, 2017.
In Germany and other EMEA markets, there were 581 active patients on Optune at September 30, 2018, representing 30 percent growth versus September 30, 2017.
In Japan, there were 69 active patients on Optune at September 30, 2018, representing 6,800 percent growth versus September 30, 2017.
Additionally, 1,243 prescriptions were received in the three months ended September 30, 2018, representing 16 percent growth compared to the same period in 2017, and flat versus the three months ended June 30, 2018. The year-over-year increase in prescriptions was driven primarily by commercial activities in the United States and Germany and Optune launch activities in Japan. We saw continued growth in prescriptions for newly diagnosed GBM with more than 930 Optune prescriptions in the third quarter, 75% of total prescriptions, written for patients with newly diagnosed GBM.

In the United States, 907 prescriptions were received in the three months ended September 30, 2018, representing 13 percent growth compared to the same period in 2017.
In Germany and other EMEA markets, 288 prescriptions were received in the three months ended September 30, 2018, representing 7 percent growth compared to the same period in 2017.
In Japan, 48 prescriptions were received in the three months ended September 30, 2018, representing 4,700 percent growth compared to the same period in 2017.
For the three months ended September 30, 2018, net revenues were $64.8 million, representing 29 percent growth versus the same period in 2017. Revenue growth was driven by increased Optune adoption in the United States and Germany and continuing launch activities in Japan, partially offset by the absence of one-time benefits from the 2017 cash to accrual revenue recognition transition.

For the three months ended September 30, 2018, cost of revenues was $18.9 million compared to $15.2 million for the same period in 2017, representing an increase of 25 percent. The increase was primarily driven by the cost of shipping transducer arrays to a higher volume of commercial patients, as well as an increase in field equipment depreciation.

Research, development and clinical trials expenses for the three months ended September 30, 2018, were $13.1 million compared to $9.3 million for the same period in 2017, representing an increase of 41 percent. This was primarily due to an increase in clinical trial and personnel expenses for our METIS, LUNAR, and PANOVA-3 trials and an increase in costs associated with medical affairs.

Sales and marketing expenses for the three months ended September 30, 2018, were $19.1 million compared to $16.4 million for the same period in 2017, representing an increase of 17 percent. This was primarily due to increases in our global sales force, increased marketing and market access expenses and increased facility expenses to support our geographical expansion in Japan and Austria.

General and administrative expenses for the three months ended September 30, 2018, were $18.9 million compared to $15.2 million for the same period in 2017, representing an increase of 24 percent. This was primarily due to an increase in share based compensation and an increase in professional services.

Personnel costs for the three months ended September 30, 2018, included $10.5 million in non-cash share-based compensation expenses, comprised of $0.5 million in cost of revenues; $1.2 million in research, development and clinical trials; $2.0 million in sales and marketing; and $6.8 million in general and administrative expenses. Total non-cash share-based compensation expenses for the third quarter 2017 were $8.6 million.

Net loss for the three months ended September 30, 2018, was $11.7 million compared to net loss of $11.5 million for the same period in 2017, representing a 2 percent decrease in net income.

At September 30, 2018, we had $123.0 million in cash and cash equivalents and $104.7 million in short-term investments, for a total balance of $227.7 million in cash, cash equivalents and short-term investments. This represents an increase of $8.7 million in cash and investments since June 30, 2018.

Anticipated clinical trial milestones

Initiation of phase 3 pivotal trial in recurrent ovarian cancer (Q4 2018)
First patient enrollment in phase 2 pilot HEPANOVA trial in advanced liver cancer (Q4 2018)
Final data collection from phase 3 pivotal METIS trial in brain metastases (2020)
Final data collection from phase 3 pivotal LUNAR trial in non-small cell lung cancer (2021)
Final data collection from phase 3 pivotal PANOVA 3 trial in locally advanced pancreatic cancer (2022)
Conference call details

Novocure will host a conference call and webcast to discuss third quarter 2018 financial results today, Thursday, October 25, 2018, at 8 a.m. EDT. Analysts and investors can participate in the conference call by dialing 855-442-6895 for domestic callers and 509-960-9037 for international callers, using the conference ID 2186119 .

The webcast, earnings slides presented during the webcast and the corporate presentation can be accessed live from the Investor Relations page of Novocure’s website, www.novocure.com/investor-relations, and will be available for at least 14 days following the call.

On October 25, 2018 Nordic Nanovector ASA (OSE: NANO) reported that Betalutin (177Lu-satetraxetan-lilotomab) has been granted a Promising Innovative Medicine (PIM) designation by the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) for the treatment of patients with advanced relapsed/refractory follicular lymphoma (R/R FL) (Press release, Nordic Nanovector, OCT 25, 2018, View Source [SID1234530218]). The designation was granted based on data from the first part of the Phase 1/2 LYMRIT 37-01 trial.

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Lisa Rojkjaer MD, Nordic Nanovector CMO, commented: "We are delighted by the MHRA’s decision to award PIM designation to Betalutin. This acknowledges the high unmet medical need of this patient population as well as the potential of Betalutin to offer therapeutic benefits to FL patients. Both the PIM and Fast Track designations (granted by the FDA in June) are very encouraging, as they provide opportunities for enhanced dialogue with health authorities and the potential to bring Betalutin to patients more quickly."

PIM designation constitutes Step 1 of the UK Early Access to Medicines Scheme (EAMS). EAMS aims to give patients in the UK early access to medicines that do not yet have a marketing authorisation but meet a medical need that is currently not being met. PIM designation means that a medicinal product is a promising candidate for the EAMS, for the treatment, diagnosis or prevention of life-threatening or seriously debilitating conditions with an unmet need.

On October 25, 2018 Taiho Oncology, Inc. reported that the United States Food and Drug Administration (FDA) has accepted and granted priority review for the supplemental New Drug Application (sNDA) for LONSURF (trifluridine/tipiracil, TAS-102) as a treatment for patients with previously treated, advanced or metastatic gastric adenocarcinoma, including cancer of the gastroesophageal junction (Press release, Taiho, OCT 25, 2018, View Source [SID1234530219]). The FDA has provided an anticipated Prescription Drug User Fee Act (PDUFA) action date of February 24, 2019.

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"We look forward to working with the FDA as they consider the application for LONSURF under priority review," said Martin Birkhofer, MD, senior vice president and Chief Medical Officer, Taiho Oncology, Inc.

The sNDA is based on data from the global, randomized, double blind pivotal Phase III (TAGS) trial evaluating LONSURF versus placebo and best supportive care in patients with heavily pretreated metastatic gastric/gastroesophageal junction (GEJ) adenocarcinoma that progressed or were intolerant to previous lines of therapy. The trial met its primary endpoint of prolonged overall survival (OS) and secondary endpoint measures of progression-free survival (PFS), as well as continuing to demonstrate LONSURF’s consistent safety and tolerability profile. Full results from this study were recently presented at the European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper) 2018 Congress in Munich and published simultaneously in The Lancet Oncology.

LONSURF, in the United States, is indicated for the treatment of patients with metastatic colorectal cancer who have been previously treated with fluoropyrimidine-, oxaliplatin- and irinotecan-based chemotherapy, an anti-VEGF biological therapy and, if RAS wild-type, an anti-EGFR therapy.[1]

About TAGS
TAGS (TAS-102 Gastric Study) is a Taiho-sponsored pivotal Phase III, multinational, randomized, double-blind study evaluating trifluridine/tipiracil, also known as TAS-102, plus best supportive care (BSC) versus placebo plus BSC in patients with metastatic gastric cancer, including gastroesophageal junction cancer, refractory to standard treatments. The primary endpoint in the TAGS trial is overall survival (OS), and the main secondary endpoint measures include progression-free survival (PFS), and safety and tolerability, as well as quality of life.

TAGS enrolled 507 adult patients with metastatic gastric cancer who had previously received at least two prior regimens for advanced disease. The study was conducted in Japan, the United States, the European Union, Russia, Belarus, Israel, and Turkey.

For more information on TAGS, please visit www.ClinicalTrials.gov (View Source). The ClinicalTrials.gov Identifier is NCT02500043.

About Metastatic Gastric Cancer
Gastric cancer, also known as stomach cancer, is a disease in which malignant cells form in the lining of the stomach. It is the fifth most common cancer worldwide and the third most common cause of cancer-related death (after lung and liver cancer), with an estimated 723,000 deaths annually.[2] Approximately 50 percent of patients with gastric cancer have advanced disease at the time of diagnosis.[3]

Standard chemotherapy regimens for advanced gastric cancer include fluoropyrimidines, platinum derivatives, and taxanes (with ramucirumab), or irinotecan. The addition of trastuzumab to chemotherapy is standard of care for patients with HER2-neu-positive advanced gastric cancer. However, after failure of first- and second-line therapies, standard third-line treatments are limited.

About Gastroesophageal Junction Cancer
Gastroesophageal junction cancer is a type of cancer that begins in cells located near the GE junction, the area where the esophagus connects to the stomach.[4] It remains a significant clinical problem that is increasing in incidence, and is associated with a poor prognosis. The majority of patients present with advanced disease, and less than 50 percent undergo curative treatment.[5]

About LONSURF
LONSURF (trifluridine/tipiracil) is an oral anticancer drug, which utilizes the combination of trifluridine (FTD) and tipiracil (TPI), whose dual mechanism of action is designed to maintain clinical activity and differs from conventional fluoropyrimidines. FTD is an antineoplastic nucleoside analogue, which is incorporated directly into the DNA, thereby interfering with the function of DNA. The blood concentration of FTD is maintained via TPI, which is an inhibitor of the FTD-degrading enzyme, thymidine phosphorylase.

In Japan, Taiho Pharmaceutical has been marketing LONSURF for the treatment of unresectable advanced or recurrent colorectal cancer since 2014. In the United States, beginning in 2015, Taiho Oncology, Inc., a U.S. subsidiary of Taiho Pharmaceutical, began marketing the drug for the treatment of patients with mCRC who have been previously treated with fluoropyrimidine-, oxaliplatin- and irinotecan-based chemotherapy, an anti-VEGF biological therapy, and if RAS wild-type, an anti-EGFR therapy. In June 2015, Taiho Pharmaceutical and Servier entered into an exclusive license agreement for the co-development and commercialization of LONSURF in Europe and other countries outside of the United States, Canada, Mexico and Asia. In parts of Asia outside of Japan, Taiho Pharmaceutical’s business partner TYY Biopharm launched LONSURF in Taiwan in July 2018, and Jeil Pharmaceutical is preparing to bring the drug to market in South Korea.

As of October 2018, LONSURF has been approved as a treatment for advanced mCRC in 61 countries and regions worldwide.

Indications and Use1
LONSURF is a combination of trifluridine, a nucleoside metabolic inhibitor, and tipiracil, a thymidine phosphorylase inhibitor, indicated for the treatment of patients with metastatic colorectal cancer who have been previously treated with fluoropyrimidine-, oxaliplatin- and irinotecan-based chemotherapy, an anti-VEGF biological therapy, and if RAS wild-type, an anti-EGFR therapy.

Important Safety Information1

LONSURF may cause serious side effects, including:

Low blood counts. Low blood counts are common with LONSURF and can sometimes be severe and life‑threatening. LONSURF can cause a decrease in your white blood cells, red blood cells, and platelets. Low white blood cells can make you more likely to get serious infections that could lead to death. Your healthcare provider should do blood tests before you receive LONSURF, at day 15 during treatment with LONSURF, and as needed to check your blood cell counts. Your healthcare provider may lower your dose of LONSURF or stop LONSURF if you have low white blood cell or platelet counts
Tell your healthcare provider right away if you get any of the following signs and symptoms of infection during treatment with LONSURF: fever, chills, or body aches.

Before taking LONSURF, tell your healthcare provider about all of your medical conditions, including if you:

Have kidney or liver problems
Are pregnant or plan to become pregnant. LONSURF can harm your unborn baby
Females who can become pregnant should use effective birth control during treatment with LONSURF. Tell your healthcare provider immediately if you become pregnant
Males, while on treatment and for 3 months after your last dose of LONSURF, you should use a condom during sex with female partners who are able to become pregnant. Tell your healthcare provider right away if your partner becomes pregnant while you are taking LONSURF
Are breast‑feeding or plan to breast‑feed. It is not known if LONSURF passes into your breast milk. Do not breast‑feed during treatment with LONSURF and for 1 day after your last dose of LONSURF
Tell your healthcare provider about all the prescription and over‑the‑counter medicines, vitamins, and herbal supplements you take.

The most common side effects with LONSURF include tiredness, nausea, decreased appetite, diarrhea, vomiting, abdominal pain, and fever.

Tell your doctor if you have nausea, vomiting, or diarrhea that is severe or that does not go away.

These are not all of the possible side effects of LONSURF. For more information, ask your healthcare provider. Call your doctor for medical advice about side effects.

On October 25, 2018 AIVITA Biomedical, Inc., a biotech company specializing in innovative stem cell applications, reported the enrollment of its first patient in the Company’s Phase 2 clinical trial for newly diagnosed glioblastoma (Press release, AIVITA Biomedical, OCT 25, 2018, View Source [SID1234530220]). The single-arm, open-label trial is expected to enroll approximately 55 patients to receive the Company’s ROOT OF CANCER treatment, an immunotherapy which targets the tumor-initiating cells that are responsible for cancer proliferation and metastasis.

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The trial’s first patient was enrolled by the University of California, Irvine (UCI) Comprehensive Brain Tumor Program and will be treated under the direction of UCI Health neuro-oncologist and Principal Investigator Daniela Bota, MD, PhD. A second clinical site in San Diego is scheduled to open in late October, with additional clinical sites expected to be added in the coming months.

The treatment, autologous dendritic cells loaded with autologous tumor antigens derived from self-renewing tumor cells, is administered as an adjunctive therapy following primary surgery plus concurrent chemoradiation.

"We are proud to work with Dr. Bota to provide this next-generation immunotherapy to patients in need," said Dr. Robert Dillman, AIVITA’s Chief Medical Officer. "This is the first of many sites that will participate in our Phase 2 clinical trial, permitting fast patient recruitment and return of clinical data."

AIVITA’s ROOT OF CANCER technology is also the subject of an active Phase 2 clinical trial in ovarian cancer in the USA. The Company is pursuing commercialization of the platform treatment for melanoma patients in Japan.

About Glioblastoma

Glioblastoma (GBM) is the most aggressive and most common form of malignant brain tumor. Median survival is only nine months, rising to 15–16 months for those able to receive aggressive standard of care surgery and adjuvant chemoradiation.1 The cause of most cases is unclear. The National Cancer Institute estimates there will be 23,880 new cases of brain and nervous system cancer in 2018.

[1] Bi, Wenya Linda, and Rameen Beroukhim. "Beating the Odds: Extreme Long-Term Survival with Glioblastoma." Neuro-Oncology 16.9 (2014): 1159–1160. PMC. Web. 18 June 2018.

About the ROOT OF CANCER GBM trial

AIVITA’s treatment is a platform technology applicable to any solid tumor type and consists of autologous dendritic cells loaded with autologous tumor antigens from autologous self-renewing tumor-initiating cells.

Patients eligible for treatment will be those (1) who have recovered from surgery such that they are about to begin concurrent chemotherapy and radiation therapy (CT/RT), (2) for whom an autologous tumor cell line has been established, (3) have a Karnofsky Performance Status of > 70 and (4) have undergone successful leukapheresis from which peripheral blood mononuclear cells (PBMC) were obtained that can be used to generate dendritic cells (DC).

On October 25, 2018 McKesson Corporation (NYSE:MCK) reported that revenues for the second quarter ended September 30, 2018, were $53.1 billion, up 2% compared to $52.1 billion a year ago, and also up 2% on a constant currency basis (Press release, McKesson, OCT 25, 2018, View Source [SID1234530201]). On the basis of U.S. generally accepted accounting principles ("GAAP"), second-quarter earnings per diluted share from continuing operations was $2.51, compared to earnings per diluted share of $0.01 a year ago. GAAP earnings per diluted share included a pre-tax benefit of $90 million, or $0.33 per diluted share, related to a reversal of a contractual liability associated with McKesson’s equity investment in Change Healthcare. Prior year GAAP earnings per diluted share included $2.60 per diluted share of non-cash goodwill and other long-lived asset impairment charges, and restructuring charges.

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Second-quarter Adjusted Earnings per diluted share was $3.60, up 10% compared to $3.28 a year ago, primarily driven by a lower tax rate, including a discrete tax benefit of $42 million, or $0.21 per diluted share, and the aforementioned reversal of a contractual liability, partially offset by the previously announced customer losses in our U.S. Pharmaceutical business, incremental challenges in our businesses in the U.K. and France, and increased litigation expenses related to opioids.

"While our operational performance reflects anticipated challenges coming into the fiscal year, our second quarter results were primarily affected by the incremental headwinds we are facing in the U.K. and French markets, driving underperformance versus our expectations. We continue to have conversations with the U.K. government to discuss the patient-care services that pharmacies provide and how this low-cost setting of care is vital to the healthcare system, while also working to accelerate efficiency and growth opportunities across all of our businesses," said John H. Hammergren, chairman and chief executive officer.

For the first half of the fiscal year, McKesson generated cash from operations of $318 million, and invested $248 million internally, resulting in free cash flow of $70 million, which was ahead of the company’s expectations. During the first half of the fiscal year, McKesson also paid $840 million for acquisitions, repurchased $877 million of its common stock, paid $139 million in dividends and the company ended the quarter with cash and cash equivalents of $2.1 billion.

"We are pleased with the contribution of our recent acquisitions, including MSD and RxCrossroads, which aligns with our stated multi-year strategic growth initiative. And we also continue to return capital to our shareholders through share repurchases and dividends," concluded Hammergren.

Multi-Year Strategic Growth Initiative Update

As previously announced on April 25, 2018, McKesson launched a multi-year strategic growth initiative, inclusive of plans to optimize the company’s operating and cost structures. The company expects these cost actions will strengthen McKesson’s ability to focus resources, reduce complexity and improve efficiency and cost-competitiveness, enhancing and optimizing operations. McKesson expects these initiatives and actions will generate approximately $300 million to $400 million in annual pre-tax gross savings that will be substantially realized by the end of Fiscal 2021.

"We’ve prioritized growth opportunities, which include our manufacturer value proposition, services to support specialty pharmaceuticals and the future of retail pharmacy, all supported by data and analytics. Our cost reductions and operating model optimization will drive significant savings to support these priority growth areas," said Brian S. Tyler, president and chief operating officer. "And as we move forward, the savings generated will make McKesson a more streamlined and efficient operation, complementing our investments and improving operating profit growth for the organization."

Segment Results

U.S. Pharmaceutical and Specialty Solutions revenues were $41.6 billion for the quarter, up 2%, driven primarily by market growth and acquisitions, partially offset by previously announced customer losses and branded to generic conversions. Segment GAAP operating profit was $610 million and GAAP operating margin was 1.47%. Segment adjusted operating profit was $635 million and adjusted operating margin was 1.53%.

European Pharmaceutical Solutions revenues were $6.6 billion for the quarter, down 2% on a reported basis and down 1% on a constant currency basis, driven primarily by the previously disclosed reduction in owned retail pharmacies and a challenging operating environment in the U.K. and increased competition in France versus the prior year, partially offset by market growth in other countries. Segment GAAP operating profit was $10 million and GAAP operating margin was 0.15%. Segment adjusted operating profit was $53 million and adjusted operating margin was 0.80%. On a constant currency basis, adjusted operating profit was $54 million and adjusted operating margin was 0.81%.

Medical-Surgical Solutions revenues were $1.9 billion for the quarter, up 17%, driven primarily by an acquisition and market growth. Segment GAAP operating profit was $105 million and GAAP operating margin was 5.39%. Segment adjusted operating profit was $138 million and adjusted operating margin was 7.08%.

Revenues included in Other were $2.9 billion for the quarter, down 5% on a reported basis and down 1% on a constant currency basis, driven primarily by the prior year sale of the Enterprise Information Solutions business, partially offset by market growth and acquisitions. Other GAAP operating profit was $95 million and adjusted operating profit was $300 million. On a constant currency basis, adjusted operating profit was $310 million.

Fiscal Year 2019 Outlook

McKesson now expects Adjusted Earnings per diluted share of $13.20 to $13.80 for the fiscal year ending March 31, 2019, from the previous range of $13.00 to $13.80 per diluted share.

McKesson does not provide forward-looking guidance on a GAAP basis as the company 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, as items are inherently uncertain and depend on various factors, many of which are beyond the company’s control.

Dividend Declaration

The company’s Board of Directors yesterday declared a regular dividend of thirty-nine cents per share of common stock. The dividend will be payable on January 2, 2019, to stockholders of record on December 3, 2018.

Conference Call Details

The company has scheduled a conference call for today, Thursday, October 25th, at 8:00 AM ET. The dial-in number for individuals wishing to participate on the call is 323-794-2599. Craig Mercer, senior vice president, Investor Relations, is the leader of the call, and the password to join the call is ‘McKesson’. A telephonic replay of this conference call will be available for five calendar days. For individuals wishing to listen to the replay, the dial-in number is 719-457-0820 and the pass code is 5906405. 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 conferences:

27th Annual Credit Suisse Healthcare Conference, November 12-15, 2018, Scottsdale, AZ;
Evercore ISI HealthCONx Conference, November 27-29, 2018, Boston, MA; and
37th Annual J.P. Morgan Healthcare Conference, January 7-10, 2019, 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, acquisition-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring and asset impairment charges, and other adjustments. 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 and asset impairment 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.

Constant Currency

McKesson also presents its financial results on a constant currency 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. Constant currency 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 constant currency 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 operating activities less property acquisitions and capitalized software expenditures, as outlined in the company’s condensed consolidated statements of cash flows.

Risk Factors

Except for historical information contained in this press release, matters discussed may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These statements may be identified by their use of forward-looking terminology such as "believes", "expects", "anticipates", "may", "will", "should", "seeks", "approximately", "intends", "plans", "estimates" or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. It is not possible to predict or identify all such risks and uncertainties; however, the most significant of these risks and uncertainties are described in the company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission and include, but are not limited to: changes in the U.S. healthcare industry and regulatory environment; managing foreign expansion, including the related operating, economic, political and regulatory risks; changes in the Canadian healthcare industry and regulatory environment; exposure to European economic conditions, including recent austerity measures taken by certain European governments; changes in the European regulatory environment with respect to privacy and data protection regulations; fluctuations in foreign currency exchange rates; the company’s ability to successfully identify, consummate, finance and integrate acquisitions; the performance of the company’s investment in Change Healthcare; the company’s ability to manage and complete divestitures; material adverse resolution of pending legal proceedings; competition and industry consolidation; substantial defaults in payment or a material reduction in purchases by, or the loss of, a large customer or group purchasing organization; the loss of government contracts as a result of compliance or funding challenges; public health issues in the U.S. or abroad; cyberattack, natural disaster, or malfunction of sophisticated internal computer systems to perform as designed; the adequacy of insurance to cover property loss or liability claims; the company’s proprietary products and services may not be adequately protected, and its products and solutions may be found to infringe on the rights of others; system errors or failure of our technology products or services to conform to specifications; disaster or other event causing interruption of customer access to data residing in our service centers; changes in circumstances that could impair our goodwill or intangible assets; new or revised tax legislation or challenges to our tax positions; general economic conditions, including changes in the financial markets that may affect the availability and cost of credit to the company, its customers or suppliers; changes in accounting principles generally accepted in the United States of America; withdrawal from participation in multiemployer pension plans or if such plans are reported to have underfunded liabilities; inability to realize the expected benefits from the company’s restructuring and business process initiatives; difficulties with outsourcing and similar third party relationships; risks associated with the company’s retail expansion; and the company’s inability to keep existing retail store locations or open new retail locations in desirable places. The reader should not place undue reliance on forward-looking statements, which speak only as of the date they are first made. Except to the extent required by law, the company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

Shareholders are encouraged to review the company’s filings with the Securities and Exchange Commission.