McKesson posts 5% lift in Q1 revenues

SAN FRANCISCO -- McKesson on Thursday reported revenues of $49.7 billion for the first quarter, up 5% compared to a year ago. 

For the period ended June 30, net income was $542 million, or $2.38 a share, compared with $576 million, or $2.45 cents a share, a year earlier. Adjusted earnings rose to $3.50 a share from $3.14. 

“McKesson’s first-quarter operating results represent a solid start to the fiscal year, consistent with our expectations,” said John H. Hammergren, chairman and chief executive officer.

For the first quarter, McKesson generated cash from operations of $1.9 billion, and ended the quarter with cash and cash equivalents of $4.7 billion. During the quarter, McKesson paid $1.8 billion for acquisitions, $66 million in dividends and had internal capital spending of $114 million.

“We operate businesses that continue to produce strong cash flow results,” Hammergren added. “Our management team is focused on driving long-term value for our shareholders. We were pleased to have successfully closed several acquisitions during the quarter, further extending our strong track record of value creation through our portfolio approach to capital deployment.”

McKesson reaffirmed its adjusted earnings guidance of $13.43 to $13.93 per share for the year ending in March 2017.

In terms of revenues by segment, Distribution Solutions revenues were $49.0 billion for the quarter, up 5% both on a reported basis and on a constant currency basis.

North America pharmaceutical distribution and services revenues of $41.2 billion for the quarter were up 4% on a reported basis and 5% on a constant currency basis, primarily reflecting market growth, acquisitions and our mix of business.

International pharmaceutical distribution and services revenues were $6.3 billion for the quarter, up 8% on a reported basis and 9% on a constant currency basis, driven by acquisitions and market growth.

Medical-Surgical distribution and services revenues were up 2% for the quarter, driven by market growth, partially offset by the prior year sale of the ZEE Medical business in the second quarter of Fiscal 2016.

In the first quarter, Distribution Solutions GAAP operating profit was $928 million and GAAP operating margin was 1.89%. First-quarter adjusted operating profit was $1.1 billion, down 1% from the prior year on a constant currency basis. Adjusted operating margin for the Distribution Solutions segment was 2.29% on a constant currency basis.

Technology Solutions revenues were down 2% on a reported basis and 1% on a constant currency basis in the first quarter, primarily driven by an anticipated year-over-year decline in our hospital software business and the prior year sale of the nurse triage business in the first quarter of Fiscal 2016, partially offset by growth in our other technology businesses.

Technology Solutions GAAP operating profit was $168 million for the first quarter and GAAP operating margin was 23.20%. On a constant currency basis, adjusted operating profit was $179 million for the first quarter and adjusted operating margin was 24.69%