Question-and-Answer Session
Operator
Larry Marsh your line is open. If you would like to state your company name please
Larry Marsh - Lehman Brothers
Lehman brothers.
Operator
Go ahead with your question.
Larry Marsh - Lehman Brothers
Well, okay. Thanks good afternoon everyone and thanks John and Jeff for the rundown and good results. I guess, a big future question mainly for John, you talk about the opportunities in the market to take some of this book business and move it to direct as you think about customers addressing significant opportunities does that changed the profit equation for your business, what would be the catalyst for that and sort of why there is any sort of fluctuation in that trend as you think about fiscal '09?
John H. Hammergren - Chairman, President and Chief Executive Officer
Yes. To the point Larry, we are seeing a trend where our customers are looking for us to provide more service for their stores than we might have in the past, particularly on the warehousing side of the business. When we go to a direct model, we have more responsibility for service levels, we obviously have a bigger stake in the inventory and perform more of our customers and as a result we actually charge more for the service and make more on the service as well. So, we both have improved profitability as well as, I think, additional momentum with our customers and better engagement with our customers when we're doing direct store deliveries rather than warehouse business.
Larry Marsh - Lehman Brothers
Okay. But I guess, the question is, is there a particular trend in that business where you would see a major changes as you go forward?
John H. Hammergren - Chairman, President and Chief Executive Officer
No. I think, it's better trend than we've seen for some time but we see it accelerating perhaps. And this is both the business that that may have done on their own around us as well as business that may be doing with us through the warehouse that would transition to a more direct store kind of delivery model from McKesson. So, we've talked about for some time, our interest in providing more and more service to our customers and I think that in addition to our strong balance sheet, our ability to manage generics, our ability to do things that our customers haven't relied on us to do in the past or increasing their reliance on McKesson as a value business partners. So, even with some of these independence that we have penetrated with OneStop Generics, they might have purchased around us their generic volume in the past and now they are buying it from McKesson. So, this more holistic approach is improving the value that we are delivering to our customers and also as a byproduct improving the profitability of the business on a marginal rate basis.
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