McKesson Corp Earnings Cheat Sheet: Net Income Keeps Falling, but Tops Estimates

S&P 500 (NYSE:SPY) component McKesson Corporation (NYSE:MCK) reported its results for the second quarter. McKesson delivers cost-reducing medicines, pharmaceutical supplies, information, and care management products and services.

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McKesson Earnings Cheat Sheet for the Second Quarter

Results: Net income for the drug wholesaler fell to $296 million ($1.18 per share) vs. $327 million ($1.25 per share) a year earlier. This is a decline of 9.5% from the year earlier quarter.

Revenue: Rose 9.7% to $30.22 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: MCK reported adjusted net income of $1.63 per share. By that measure, the company beat the mean estimate of $1.39 per share. It beat the average revenue estimate of $29.5 billion.

Quoting Management: “I am pleased with McKesson’s second-quarter operating results, with strong execution from both Distribution Solutions and Technology Solutions driving earnings growth,” said John H. Hammergren, chairman and chief executive officer. “Based on the momentum from our first-half results, we are raising our previous outlook for the fiscal year and now expect Adjusted Earnings between $6.19 and $6.39 per diluted share for the fiscal year ending March 31, 2012.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 13 cents in the first quarter, by 6 cents in the fourth quarter of the last fiscal year, and by one cent in the third quarter of the last fiscal year.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 4% from the year earlier quarter.

Revenue has now gone up for three straight quarters. In the first quarter, revenue rose 9.2% to $29.98 billion while the figure rose 8.3% in the fourth quarter of the last fiscal year from the year earlier.

Gross margins grew 0.5 percentage point to 5.5%. The growth seemed to be driven by increased revenue, as the figure rose 9.7% from the year earlier quarter while costs rose 9.2%.

Looking Forward: Over the past ninety days, the average estimate for the third quarter has fallen from $1.54 per share to $1.52, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $6.21 per share, a rise from $6.10 ninety days ago.

Competitors to Watch: AmerisourceBergen Corp. (NYSE:ABC), Cardinal Health, Inc. (NYSE:CAH), Henry Schein, Inc. (NASDAQ:HSIC), Patterson Companies, Inc. (NASDAQ:PDCO), Cerner Corporation (NASDAQ:CERN), Owens & Minor, Inc. (NYSE:OMI), Omnicare, Inc. (NYSE:OCR), Grupo Casa Saba, S.A. (NYSE:SAB), MWI Veterinary Supply, Inc. (NASDAQ:MWIV), and Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).

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(Source: Xignite Financials)