Britt J. Vitalone
Executive Vice President and Chief Financial Officer at McKesson
Great. Thank you, Brian, and good afternoon, everyone. Fiscal 2024 marks another year of strong execution and financial performance. We entered fiscal 2025 with the momentum to deliver growth and create value for our customers, partners and shareholders. Today, I'll discuss our fourth quarter and full year fiscal 2024 results. Then I'll provide an overview of our fiscal 2025 outlook. My comments today will refer to our adjusted results unless I state otherwise.
We're exiting fiscal 2024 with solid performance, delivering earnings per diluted share of $6.18 in the fourth quarter and $27.44 for the full year. Our fourth quarter results were in line with our expectations and with the earnings per diluted share guidance range that we provided on our third quarter earnings call, demonstrating our ability to consistently execute against company priorities and create long-term sustainable value for our shareholders. For the full year, when excluding fiscal 2023 contributions from COVID-related programs and McKesson Ventures, adjusted operating profit grew 9% and adjusted EPS increased 17%. These results are above our long-range targets and reflect the strength of our products, services and operating execution. Let me start with a review of the fiscal fourth quarter.
Revenues increased 11% to $76.4 billion, led by growth in the U.S. Pharmaceutical segment, resulting from increased prescription volumes, including higher volumes from specialty products, retail national account customers and GLP-1 medications. Gross profit was $3.3 billion, an increase of 7% and primarily a result of specialty distribution growth within the U.S. Pharmaceutical segment, including our leading plasma and biologics business. Operating expenses increased 11% to $2.1 billion driven by higher costs to support growth across the businesses.
During the quarter, we recorded a reserve for environmental matters of $0.09 per share for increased remediation costs related to McKesson's former chemical business which we disposed of several years ago. The environmental reserve was recorded in our corporate segment. Operating profit was $1.3 billion, which was flat to the prior year driven by growth in the U.S. Pharmaceutical segment, offset by increased corporate expenses, which included the previously outlined environmental reserve. Year-over-year results were also impacted by anticipated lower contributions from U.S. government COVID-19 programs in both the U.S. Pharmaceutical and Medical Surgical Solutions segments when compared to the prior year.
When adjusting for the COVID-19 programs and a modest McKesson Ventures loss in fiscal 2023, adjusted operating profit increased 4% in the quarter. Moving below the line. Interest expense was $75 million, an increase of 7%, driven by higher short-term borrowings of commercial paper compared to the prior year. The higher short-term borrowings resulted from lower average cash balances in part due to the impact from the Change Healthcare outage. The effective tax rate for the quarter was 28.1%, which is in line with our previous guidance and driven by a discrete tax item. Fourth quarter diluted weighted average shares outstanding was $131.6 million, a decrease of 5% year-over-year. Wrapping up our consolidated results, Earnings per diluted share was $6.18, again, in line with the implied earnings per diluted share that we provided on our third quarter earnings call.
While this represents a decrease of 14% compared to the prior year, fourth quarter results were principally driven by a higher tax rate and lower COVID-19 program contributions in fiscal 2024, partially offset by a lower share count and growth in U.S. Pharmaceutical segment. Turning now to our fourth quarter segment results, which can be found on Slides seven through 11 and starting with U.S. Pharmaceutical. Revenues were $68.8 billion, an increase of 12% and driven by increased prescription volumes, including higher volumes from specialty products, retail national account customers and GLP-1 medications. As we have previously guided, GLP-1 medications continue to show growth year-over-year but despite this increase, the rate of growth continues to moderate. In the quarter, GLP-1 revenues were $7.5 billion, an increase of approximately $1.5 billion or 24% compared to fiscal 2023. However, GLP-1 revenues were flat on a sequential basis. For the quarter, operating profit increased 5% to $901 million driven by growth in the distribution of specialty products to providers and health systems and increased contributions from our generics program. The breadth of capabilities and assets continued to deliver robust value to our stakeholders.
Our Prescription Technology Solutions segment, revenues were $1.2 billion, which were flat to the prior year. Lower contributions from the third-party logistics business were offset by growth across our technology services products and primarily our access solutions. Within this segment, CoverMyMeds continues to deliver value for our partners by increasing connectivity between pharmacies, providers, payers and biopharma manufacturers through next-generation access, affordability and adherence solutions that are automated and integrated into provider workflows. Results in the fourth quarter reflect organic growth across our access solutions, including prior authorization services as we extended existing partnerships with biopharma manufacturers. In addition to the strength of our access solutions, year-over-year performance was also supported by higher volumes across our affordability solutions.
Operating profit decreased 3% to $212 million, driven by higher costs and investments to sustain the momentum and growth across the biopharma services platform. This included incremental infrastructure investments and cost to deliver increasing levels of ROI for our customers. Operating profit was also impacted by lower third-party logistics performance in the quarter compared to the prior year. Turning to Medical-Surgical Solutions. Revenues were $2.8 billion, an increase of 6% and operating profit was $248 million, which was flat versus the prior year. Fourth quarter results reflect growth in the Primary Care and Extended Care businesses, including higher volumes of illness season testing, partially offset by lower contributions from the kitting storage and distribution of ancillary supplies for the U.S. government's COVID-19 program compared to the prior year. As a reminder, each illness season is unique depending on the onset and severity of various respiratory illnesses during that particular year.
Next, let me address our international results. Revenues were $3.5 billion, an increase of 6% and operating profit was $94 million, an increase of 18%. These strong results were driven by higher pharmaceutical distribution volumes in the Canadian business compared to the prior year. Wrapping up our segment review. Corporate expenses were $193 million in the quarter, an increase of 30%, driven by the previously discussed environmental reserve and higher technology infrastructure and compliance spend. Let me now turn to cash and capital deployment, which can be found on Slide 12. We ended the quarter with $4.6 billion in cash and cash equivalents. For the fiscal year, we generated $3.6 billion in free cash flow, including $687 million of capital expenditures, which included new and existing distribution centers as well as investments in technology, data and analytics to support our growth priorities. During the quarter, several of our customers were impacted by the Change Healthcare outage, delaying billing functions and claims payments.
This outage created a timing impact on McKesson's cash flows. However, the impact was less severe than we had previously indicated. We continue to focus on capital deployment to drive value for our stakeholders. In fiscal 2024, we returned $3.3 billion of cash to shareholders. We returned $3 billion through share repurchases at an average price per share of approximately $436, including $678 million of share repurchases in the fiscal fourth quarter.
Additionally, we paid dividends of $314 million for the full year. When combining share repurchases with dividends paid, we returned approximately 92% of free cash flow to shareholders in fiscal 2024. Since the beginning of fiscal 2019, we have returned $16.2 billion of cash to shareholders through share repurchases and dividends. Of this amount, approximately $14.5 billion has been returned through share repurchases, reducing our total average shares outstanding by nearly 36%. The strength of our balance sheet and strong credit metrics, supported by our strong operating performance and disciplined and balanced financial policy was recognized in the quarter by the recent Moody's credit rating upgrade to A3 from BAA1.
We are now A rated by two of the three major credit rating agencies. Our strong balance sheet and consistently robust cash flow generation, along with disciplined capital allocation continues to provide us with the financial flexibility to invest in our growth initiatives, pursue strategic opportunities and return capital to shareholders, all while maintaining a durable capital structure. Now let me discuss our fiscal 2025 outlook. The breadth of our capabilities and leading portfolio of assets across oncology and biopharma services, have led to value creation for our customers, partners and shareholders over the last five years. Our fiscal 2025 outlook is a continuation of this momentum. Let me start with our segments.
We anticipate U.S. pharmaceutical revenues to increase 16% to 19% and operating profit to increase 8% to 10% and propelled by sustainable momentum in the core distribution business and growth across our oncology platform. We continue to make investments in the core distribution network to deliver more efficiency and value for our stakeholders. The strength of our value proposition was highlighted by the recent agreement to build on our existing pharmaceutical distribution partnership with Optum. This 5-year contract begins on July 1, 2024. The fiscal 2025 segment outlook incorporates stable, growing prescription utilization trends, bolstered by further growth in our generic sourcing programs and specialty distribution, including our leading plasma and biologics business. We anticipate further growth from our differentiated oncology platform through the breadth of our assets, U.S. Oncology Network, Ontada and the Sarah Cannon Research Institute joint venture. As Brian mentioned, as of April 2024, the U.S. oncology network has grown to approximately 2,600 providers in 31 states, and we're pleased with the advancements we've made with Ontada and Sarah Cannon Research Institute supporting our mission to advance cancer care.
We are pleased with the growth we're seeing in the U.S. Pharmaceutical segment as our assets and capabilities and core distribution and the oncology platform continued to accelerate growth. In the Prescription Technology Solutions segment, we anticipate revenues to increase 18% to 22% and operating profit to increase 12% to 16%. This outlook reflects organic growth across our solutions and services as we expand and extend partnerships with biopharma manufacturers and increase the number of brands utilizing our access, affordability and adherence programs. Throughout fiscal 2024, we continue to see increased demand for our access and affordability solutions, particularly those related to GLP-1 medications.
As a reminder, McKesson's prior authorization products serve the majority of the brands for GLP-1 medications. Our products continue to generate value for our partners. Looking ahead to fiscal 2025, we anticipate that this demand will remain elevated, yet lessen as the rate of increase will be slower than prior years for GLP-1 medications. Medical-Surgical business remains well positioned to leverage the breadth and depth of its services and assets across all alternate sites of care, including growth in the primary care business and our comprehensive private label portfolio. We anticipate Medical-Surgical Solutions revenues to increase 4% to 8% and operating profit to increase 6% to 8%. Within the primary care market, we anticipate continued growth in lab solutions and specialty pharmaceuticals.
Our scale sourcing and distribution footprint has propelled expansion and growth of our private label portfolio, providing superior value for our customers. while maintaining sound economics for McKesson. In fiscal 2025, we're making investments in this segment to support the recent acquisition of Compile, a health care data platform that captures and aggregates data to provide insights and analytics for biopharma. We believe there's an initial use case across the breadth of the Medical-Surgical Solutions segment. The Medical-Surgical Solutions segment has broad relationships with providers and extensive data sets, meeting opportunities to develop incremental value creation opportunities.
Longer term, there are increased opportunities to integrate the capabilities in commercial applications across our oncology and biopharma services platforms. These investments will deliver meaningful returns to the segment and to the enterprise. In fiscal 2025, we anticipate that these investments will account for an approximate 2% operating profit headwind in the medical segment as compared to the prior year. Finally, the International segment, we anticipate revenues to increase 4% to 8% and operating profit to increase 6% to 10% year-over-year. Our diversified set of assets within our Canadian business, including the scale distribution business, continues to support growth in the International segment. We continue to make investments in our Canadian technology footprint to create a more custom and integrated supply chain for specialty drugs. As a reminder, Norway remains the only operating country in Europe that we have not entered into an agreement to sell and contributions related to operations in Norway are included in the fiscal 2025 outlook for the segment.
We intend to exit Norway as part of the completion of our European exit. In the Corporate segment, we anticipate expenses to be in the range of $580 million to $640 million, which includes increased technology spend to support the growth of our businesses and infrastructure and compliance investments. We will also continue to invest in data and analytics, including the acceleration of several investments in artificial intelligence. We are leveraging AI to increase the efficiency across our operations and increase automation and productivity for our customers. Our investments in AI and other advanced technologies play an important role in improving customer service and provider productivity. We continue to build these tools across the value chain to increase speed and success rates. One example where we're implementing AI is in our oncology platform.
The iKnowMed EHR contains structured data that can often be sparsely entered for patients' longitudinal records. Instead, unstructured data such as uploaded documents and provider authored notes, are used to capture details on patients' disease condition in response to treatment as well as many core clinical factors to have complete longitudinal patient records for real-world research core variables are required to be extracted from the unstructured data into a well-organized database. Natural language process is the only scalable solution to achieve more than 100 million documents in iKnowMed today and growing at the rate of one million documents per week. The application of AI reduces clinicians exhaustive burden in finding related documents for care and reimbursement workflows, ultimately leading to practice efficiencies and better patient care. This is just one example of many where we're using AI to power insights and deliver clinical and financial value to our stakeholders.
We've been pleased with our progress to date as we work to develop and implement various AI technologies, and we remain committed to increased investment to further extend our leadership position and deliver value to our partners and stakeholders. Now moving below the line. We anticipate interest expense to be approximately $220 million to $240 million and income attributable to noncontrolling interest to be in the range of $140 million to $160 million. We anticipate the full year effective tax rate will be in the range of approximately 18% to 20%. And as a reminder, the timing and amount of discrete tax items are difficult to predict, and therefore, we do not provide quarterly effective tax rate guidance.
Turning now to cash flow and capital deployment. We anticipate free cash flow of approximately $4.8 billion to $5.2 billion. Our working capital metrics and resulting free cash flow will vary from quarter-to-quarter and are impacted by timing including the day of the week that marks the close of a quarter. Our guidance reflects plans to repurchase approximately $2.8 billion of shares in fiscal 2025. As a result of the share repurchase activity, we estimate weighted average diluted shares outstanding to be in the range of approximately 128 million to 130 million. The strength of our balance sheet and operating cash flows provides the financial flexibility to incrementally invest both organically and inorganically for growth as well as return capital to our shareholders. Wrapping up fiscal 2025 guidance.
We anticipate revenue growth of 15% to 17% and an operating profit growth of 9% to 14% as compared to the prior year. For fiscal 2025, we anticipate earnings per diluted share of $31.25 to $32.05, which represents growth of 14% to 17% as compared to fiscal 2024. We expect earnings per share will be more heavily weighted towards the second half of the fiscal year. We also anticipate the first quarter to have the lowest contribution. As a reminder, we had a lower effective tax rate in the first quarter of fiscal 2024 due to a discrete tax item. In summary, we see strength and stability in the underlying fundamentals across our businesses.
Our sustained financial performance over the past several years has been bolstered by the strength of our financial position and the consistent operating execution, leading to compelling value creation for our customers, partners, and shareholders. We're pleased with the strong fiscal 2024 performance and the fiscal 2025 outlook reflects our continued confidence in the operating profit growth momentum across all segments of the business, supplemented by the strength of our balance sheet and strong financial position. McKesson is well positioned to deliver strong results as we successfully execute against our strategic and financial framework to drive long-term sustainable growth for all stakeholders.
With that, we can move to Q&A.
