) first-quarter fiscal 2013 (ended June 30, 2012) earnings
(excluding special items) of $1.55 per share surpassed the Zacks
Consensus Estimate of $1.49 per share. Also, the reported quarter's
adjusted earnings spiked 22% from the year-ago period due to higher
revenues and lower share count.
Revenues climbed 3% to $30.8 billion. Growth was witnessed across
both segments at McKesson. Revenues were short of the Zacks
Consensus Estimate of $31.05 billion.
Quarter in Detail
McKesson operates through two segments: Distribution Solutions and
Revenues at the Distribution Solutions segment increased 3% to $30
billion in the reported quarter. Strong growth in the US
pharmaceutical distribution revenues led to the upside.
Revenues from the US pharmaceutical distribution business came in
at $26.6 billion, up 4% driven by new business with existing
customers and market expansion.
Canadian revenue decreased 8% to $2.5 billion. The decrease was
attributable to unfavorable foreign exchange movements and fewer
sales days in the quarter. Medical-Surgical distribution and
services revenue climbed 9% to $795 million, reflecting steady
market growth and customer addition.
Revenues at the Technology Solutions segment climbed 4% to $838
million primarily due to higher services revenue. Operating
expenses climbed 5.4% in the reported quarter to $1 billion. The
acquisition of Drug Trading Company Limited, an independent banner
of Katz Group Canada Inc. and Medicine Shoppe Canada in March 2012,
was primarily responsible for the increase.
McKesson exited the quarter with gross debt-to-capitalization ratio
of 33.2%. The cash balance at the end of the reported quarter was
approximately $2 billion at McKesson.
Fiscal 2013 Outlook Backed
The company reaffirmed its outlook for fiscal 2013. McKesson
continues to expect earnings (excluding special items) in the range
of $7.05 - $7.35 share. The Zacks Consensus Estimate of $7.23 per
share is well within the company's guidance range.
The company expects to generate cash flow from operating activities
in the range of $2.0 - $2.5 billion for fiscal 2013.
MCKESSON CORP (MCK): Free Stock Analysis Report
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We have a Neutral recommendation on McKesson. Our long-term
recommendation is in line with the Zacks #3 Rank (Hold rating)
carried by the company in the short run.