McKesson Q3 Profit Down 79%, Lowers 2014 Outlook

By RTT News, 
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( - U.S. drug distributor McKesson Corp. ( MCK ) on Thursday reported a 79 percent decline in profit for the third quarter from last year, as higher revenues were more than offset by one-time charges and a loss from discontinued operations. However, the company reported an adjusted profit for the quarter. Looking ahead, the company lowered its adjusted earnings outlook for fiscal 2014.

The company's third-quarter net income was $64 million or $0.28 per share, down from $298 million or $1.24 per share last year. The latest quarter's results include loss from discontinued operations of $0.39 per share.

The results also include charges of $0.37 per share related to LIFO adjustments, $0.52 per share related to an ongoing dispute with the Canada Revenue Agency, and $0.18 per share in the Technology Solutions segment from restructuring actions in the Horizon Clinicals software platform.

Adjusted earnings per share from continuing operations were $1.45, up from $1.44 in the same period last year. On average, analysts polled by Thomson Reuters expected the company to report earnings of $1.84 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 10 percent to $34.31 billion from $31.10 billion in the prior-year period. Analysts had a consensus revenue estimate of $33.57 billion for the quarter.

Distribution Solutions revenues for the quarter grew 10 percent from the year-ago period to $33.52 billion, driven mainly by strong growth in U.S. pharmaceutical direct distribution and services revenues due to market growth and mix of business.

Within the segment, Medical-Surgical distribution and services revenues surged 67 percent, helped primarily by the acquisition of PSS World Medical and market growth.

Canadian revenues, on a constant currency basis, increased 12 percent, primarily due to market growth and new customer wins.

Revenue in the Technology Solutions segment advanced 6 percent to $784 million, driven primarily by acquisitions completed in the prior year.

Looking ahead to fiscal 2014, McKesson now forecasts adjusted earnings per share from continuing operations in a range of $8.05 to $8.20, down from the prior range of $8.40 to $8.70 per share. Analysts expect the company to report earnings of $8.63 per share for the year.

Last Thursday, McKesson said it has secured the acquisition of German peer Celesio AG (CAKFF) through two two new agreements with Celesio's largest shareholders, Franz Haniel & Cie GmbH and activist investor Elliott Management. Following the close of these deals, McKesson will exceed 75 percent ownership of Celesio on a fully diluted basis.

MCK closed Thursday's regular trading session at $177.23, up $3.95 or 2.28 percent on a volume of 2.40 million shares. However, in after-hours, the stock declined $2.23 or 1.26 percent to $175.00.

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This article appears in: News Headlines

Referenced Stocks: MCK , TRI

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