McKesson banks 30% annual growth, Health Mart footprint grows by 15%
SAN FRANCISCO — McKesson on Tuesday reported $44.9 billion in fourth-quarter revenue, up 19%, for the period ended March 31. For the fiscal year, McKesson had revenues of $179 billion compared to $137.4 billion a year ago, up 30% year-over-year.
“Our fourth-quarter results wrapped up another year of outstanding earnings growth, led by strong execution in our Distribution Solutions segment,” said John Hammergren, chairman and CEO, McKesson. “For the full year, adjusted earnings per diluted share increased 29% from the prior year. Our strong financial and operating performance combined with our disciplined portfolio approach to capital deployment provides strong momentum for Fiscal 2016.”
For the full year, McKesson generated cash from operations of $3.1 billion, and ended the year with cash and cash equivalents of $5.3 billion. During the year, McKesson had internal capital spending of $545 million, spent $170 million on acquisitions, repurchased $340 million of its common stock and paid $227 million in dividends.
In addition, the board of directors has issued a new authorization for the repurchase of up to $500 million of common stock.
“In fiscal 2015, we continued our strong track record of creating value for our shareholders with solid cash flow results and investments in the future growth of our business,” Hammergren said. “During the fourth quarter, we repurchased $340 million in common stock as part of our portfolio approach to capital deployment which includes maintaining our investment-grade ratings, while deploying our capital through a mix of internal investments, acquisitions, share repurchases and dividends.”
Distribution Solutions revenues were up 19% on a reported basis and 23% on a constant currency basis for the fourth quarter. For the full year, Distribution Solutions revenues were up 31% on a reported basis and 33% on a constant currency basis compared to the prior year.
“Distribution Solutions had another outstanding year with strong performance across the segment. We continue to deliver tremendous value for our customers by developing solutions that help drive better business health. We are proud to be a global leader in healthcare services while remaining grounded in our tradition of operational excellence in everything we do,” said Hammergren.
"In fiscal 2015 we also continued to perform well for our branded pharmaceutical manufacturing partners and maintained steady levels of compensation in return," Hammergren told analysts Tuesday morning during the company's quarterly conference call. "And Health Mart maintained its strong record of growth during fiscal 2015 ending the year with nearly 3,800 stores or approximately 15% growth over the prior year."
North America pharmaceutical distribution and services revenues, which include results from U.S. Pharmaceutical, McKesson Canada and McKesson Specialty Health, were up 18% on a reported basis and 19% and constant currency basis for the fourth quarter, primarily reflecting market growth and growth from existing customers. For the full year, North America pharmaceutical distribution and services revenues were up 16% on a reported basis and 17% on a constant currency basis compared to the prior year.
International pharmaceutical distribution and services revenues were $5.9 billion for the fourth quarter and $26.4 billion for the full year, an increase of 3% for the quarter and 5% for the full year on the underlying results of Celesio on a constant currency basis. As previously announced, full-year and prior-year results for the Brazilian businesses, PanPharma and Oncoprod, are reported as discontinued operations.
Medical-Surgical distribution and services revenues were up 5% for the fourth quarter and full year driven by market growth.
Technology Solutions products and services revenues were down 10% for the fourth quarter and down 8% for the full year. Fourth-quarter and full-year Technology Solutions revenues were impacted by an anticipated year-over-year decline in McKesson's hospital software business, the planned elimination of a product line, and the previously disclosed wind down of the wholesaler's international technology business. This revenue decline was partially offset by growth in McKesson's other technology businesses.
“I am encouraged by the solid results in our Relay Health, Payer Solutions and Medical Imaging businesses for Fiscal 2015. At the same time, we continue to optimize our portfolio in Technology Solutions and focus on helping our customers use information technology strategically to enable better business, better care, and better connectivity,” Hammergren said.
“Our Fiscal 2016 guidance reflects strong growth across our broad portfolio of businesses. McKesson expects Adjusted Earnings per diluted share of $12.20 to $12.70 for the fiscal year ending March 31, 2016, representing 12% to 16% growth year-over-year on a constant currency basis,” Hammergren concluded.