McKesson Corp Earnings: Snaps Cold Streak with Profit Growth

S&P 500 (NYSE:SPY) component McKesson Corporation (NYSE:MCK) reported its results for the third 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 Third Quarter

Results: Net income for McKesson Corporation rose to $300 million ($1.20 per share) vs. $155 million (60 cents per share) in the same quarter a year earlier. This marks a rise of 93.5% from the year earlier quarter.

Revenue: Rose 9.2% to $30.84 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: MCK reported adjusted net income of $1.40 per share. By that measure, the company beat the mean estimate of $1.37 per share. It beat the average revenue estimate of $30.13 billion.

Quoting Management: “McKesson delivered another quarter of solid operating results, and I am pleased with our accomplishments during the first nine months of our fiscal year,” said John H. Hammergren, chairman and chief executive officer. “Our strong balance sheet and cash flow also provide us with significant opportunities to create shareholder value.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 25 cents in the second quarter, by 13 cents in the first quarter, and by 6 cents in the fourth quarter of the last fiscal year.

Gross margin shrank 0.1 percentage point to 5.1%. The contraction appeared to be driven by increased costs, which rose 9.3% from the year earlier quarter while revenue rose 9.2%.

Revenue has risen the past four quarters. Revenue increased 9.7% to $30.22 billion in the second quarter. The figure rose 9.2% in the first quarter from the year earlier and climbed 8.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

Last quarter’s profit increase breaks a streak of two consecutive quarters of year-over-year profit decreases. In the second quarter, net income fell 9.5% while the figure dropped in the first quarter.

Looking Forward: The average estimate for the fourth quarter is steady at $2.07 a share. For the fiscal year, the average estimate has moved down from $6.34 a share to $6.33 over the last sixty days.

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).

Stock Performance: Shares of MCK were down 0.8% from the previous close.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com