McKesson Corporation (NYSE: MCK) today reported that revenues for the first quarter ended June 30, 2012 were $30.8 billion, up 3% compared to $30.0 billion a year ago.
- Revenues of $30.8 billion for the first quarter, up 3%.
- First-quarter GAAP earnings per diluted share of $1.58, up 40%.
- First-quarter Adjusted Earnings per diluted share of $1.55, up 22%.
- Fiscal 2013 Outlook: Adjusted Earnings per diluted share of $7.05 to $7.35.
SAN FRANCISCO, July 26, 2012 – McKesson Corporation (NYSE: MCK) today reported that revenues for the first quarter ended June 30, 2012 were $30.8 billion, up 3% compared to $30.0 billion a year ago. On the basis of U.S. generally accepted accounting principles (“GAAP”), first-quarter earnings per diluted share was $1.58 compared to $1.13 a year ago.
As previously announced, first-quarter GAAP earnings include an $81 million pre-tax gain on business combination related to the acquisition of the remaining 50% ownership interest in McKesson’s corporate headquarters building. This acquisition-related gain is excluded from the company’s calculation of Adjusted Earnings. First-quarter GAAP results also include a pre-tax charge of $16 million, recorded in the Distribution Solutions segment, to increase an existing litigation reserve for claims against McKesson relating to First DataBank’s published drug reimbursement benchmarks, commonly referred to as Average Whole Prices (“AWP”).
First-quarter Adjusted Earnings per diluted share was $1.55, up 22% compared to $1.27 a year ago.
For the first quarter, McKesson used cash in operations of $552 million, and ended the quarter with cash and cash equivalents of $2.0 billion. During the first quarter the company paid $53 million in dividends, had internal capital spending of $84 million and spent $108 million on acquisitions.
“I am pleased with McKesson’s first-quarter financial results,” said John H. Hammergren, chairman and chief executive officer. “Our results this quarter represent a solid start to our fiscal year and we continue to expect that McKesson should achieve Adjusted Earnings per diluted share of $7.05 to $7.35.”
Distribution Solutions revenues were up 3% for the first quarter. U.S. pharmaceutical distribution revenues were up 4% for the first quarter, primarily reflecting market growth and new business with existing customers.
Canadian revenues, on a constant currency basis, decreased 4% for the first quarter primarily due to four fewer sales days. Including the unfavorable currency impact of 4%, Canadian revenues decreased 8% for the first quarter.
Medical-Surgical distribution and services revenues were up 9% for the first quarter, primarily driven by market growth and new customers.
In the first quarter, Distribution Solutions GAAP operating profit was $500 million and GAAP operating margin was 1.67%. First-quarter adjusted operating profit was $553 million and the adjusted operating margin was 1.85%.
Technology Solutions revenues were up 4% for the first quarter. GAAP operating profit was $93 million for the first quarter and GAAP operating margin was 11.10%. Adjusted operating profit was $109 million for the first quarter and adjusted operating margin was 13.01%.
Fiscal Year 2013 Outlook
McKesson continues to expect Adjusted Earnings per diluted share of $7.05 to $7.35 for the fiscal year ending March 31, 2013, which excludes the following GAAP items:
- Amortization of acquisition-related intangible assets of approximately 54 cents per diluted share in Fiscal 2013.
- Acquisition expenses and related adjustments expected to add approximately 19 cents per diluted share, including the impact of the $81 million gain on business combination related to the acquisition of the remaining 50% ownership in McKesson’s corporate headquarters building.
- Litigation reserve adjustment of approximately four cents per diluted share.
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 expenses and related adjustments, and certain litigation reserve adjustments. A reconciliation of McKesson’s financial results determined in accordance with GAAP to Adjusted Earnings is provided in Schedules 2, 3 and 4 of the financial statement tables included with this release.
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: material adverse resolution of pending legal proceedings; changes in the U.S. healthcare industry and regulatory environment; changes in the Canadian healthcare industry and regulatory environment; competition; 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; implementation delay, malfunction, failure or breach of internal information systems; the adequacy of insurance to cover property loss or liability claims; the company’s failure to attract and retain customers for its software products and solutions due to integration and implementation challenges, or due to an inability to keep pace with technological advances; 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 and solutions to conform to specifications; disaster or other event causing interruption of customer access to data residing in our service centers; the delay or extension of our sales or implementation cycles for external software products; changes in circumstances that could impair our goodwill or intangible assets; foreign currency fluctuations or disruptions to our foreign operations; new or revised tax legislation or challenges to our tax positions; the company’s ability to successfully identify, consummate and integrate strategic acquisitions; 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; and changes in accounting principles generally accepted in the United States of America. 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.
The company has scheduled a conference call for 5 PM ET. The dial-in number for individuals wishing to participate on the call is 719-234-7317. Erin Lampert, vice president, Investor Relations, is the leader of the call, and the password to join the call is ‘McKesson’. A replay of this conference call will be available for five calendar days. The dial-in number for individuals wishing to listen to the replay is 888-203-1112 and the pass code is 3290743. A webcast of the conference call will also be available live and archived on the company’s Investor Relations website at www.mckesson.com/investors.
Shareholders are encouraged to review SEC filings and more information about McKesson, which are located on the company’s website.
McKesson Corporation, currently ranked 14th on the FORTUNE 500, is a healthcare services and information technology company dedicated to making the business of healthcare run better. We partner with payers, hospitals, physician offices, pharmacies, pharmaceutical companies and others across the spectrum of care to build healthier organizations that deliver better care to patients in every setting. McKesson helps its customers improve their financial, operational, and clinical performance with solutions that include pharmaceutical and medical-surgical supply management, healthcare information technology, and business and clinical services. For more information, visit http://www.mckesson.com.
Tables and full-text of earnings release also available for viewing and download in PDF format: McKesson Reports Fiscal 2013 First-Quarter Results (PDF)
(Investors and Financial Media)
(General and Business Media)