McKesson Earnings Cheat Sheet: Opportunities to Deploy Capital

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

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McKesson Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the drug wholesaler rose to $422 million ($1.62/share) vs. $348 million ($1.26/share) in the same quarter a year earlier. A rise of 21.3% from the year earlier quarter.

Revenue: Rose 8.3% to $28.85 billion YoY.

Actual vs. Wall St. Expectations: MCK beat the mean analyst estimate of $1.60/share. Estimates ranged from $1.43 per share to $1.67 per share.

Quoting Management: “Our strong balance sheet and cash flow provide us with opportunities to deploy capital to optimize the performance of our existing portfolio and lay the foundation for future growth,” said John H. Hammergren, chairman and chief executive officer. “For example, our acquisition of US Oncology solidifies our strong position within oncology and is an example of our strategy to expand our product and service offering in high-growth areas of healthcare. We plan to continue our portfolio approach to capital deployment with a mix of acquisitions, share repurchases, dividends, and internal investments.”

Key Stats: From the third quarter, the company’s current liabilities fell to $14.09 billion from $19.68 billion.

Net income has increased 1% year over year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed 23.8% from the year earlier quarter.

Gross margins grew 0.1 percentage point to 6.1%. The growth seemed to be driven by increased revenue, as the figure rose 8.3% from the year earlier quarter while costs rose 8.1%.

Over the last five quarters, revenue has increased 2.9% on average year over year. The biggest increase came in the most recent quarter, when revenue rose 8.3% from the year earlier quarter.

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 are down 1% in after hours trading.


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