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McKesson Corporation (MCK - Free Report) reported second-quarter fiscal 2019 earnings of $3.60 per share, beating the Zacks Consensus Estimate of $3.28. Adjusted earnings improved 10% year over year.
McKesson posted sales of $53.08 billion, which missed the Zacks Consensus Estimate of $53.56 billion. The figure rose 1.9% on a year-over-year basis.
McKesson has a Zacks Rank #3 (Hold).
Segmental Analysis
Revenues in the U.S. Pharmaceutical and Specialty Solutions segment were $41.61 billion, up 2.5% year over year.
Revenues in the European Pharmaceutical Solutions segment amounted to $6.64 billion, down 2% year over year. Cutthroat competition in France marred growth in the segment.
Revenues in the Medical-Surgical Solutions segment totalled $1.95 billion, up 17.3% year over year.
Revenues in the Other segment were $2.88 billion in the fiscal second quarter, down 4.9% year over year. The lackluster performance in the segment is primarily due to the sale of the Enterprise Information Solutions business. However, the downtrend was partially offset by market growth and acquisitions.
Gross profit in the reported quarter was $2.8 billion, down 1% on a year-over-year basis. Gross margin was 5.3% of net revenues, down 10 basis points (bps).
U.S. Pharmaceutical and Specialty Solutions segment had adjusted operating profit of $610 million. Adjusted operating margin was 1.5% in the segment.
European Pharmaceutical Solutions segment had adjusted operating profit of $10 million. Adjusted operating margin was 0.2 % in the segment.
Medical-Surgical segment had adjusted operating profit of $105 million. Adjusted operating margin was 5.4% in the segment.
Adjusted operating profit was $95 million in the Other segment.
Guidance
McKesson raised guidance for fiscal 2019.
The company now expects adjusted earnings per share (EPS) of $13.20-$13.80 for fiscal 2019, up from the previous range of $13.00-$13.80. Notably, the Zacks Consensus Estimate for fiscal 2019 earnings is pegged at $13.31, within the guidance.
Wrapping Up
McKesson ended the second quarter of fiscal 2019 on a mixed note, beating the Zacks Consensus Estimate for earnings, while missing the same on the top-line front.
For investors’ notice, McKesson announced a multi-year strategic growth initiative update that is expected to generate approximately $300 million to $400 million in annual pre-tax gross savings. This will be substantially realized by the end of fiscal 2021.
The company has been riding on growth in the Medical-Surgical Solutions segment. McKesson is also a leading player in the pharmaceutical and medical supplies distribution market. The improvement in international sales is a positive. McKesson is progressing well with multi-year growth plan. Management is optimistic about the recently-closed acquisition of Medical Specialties Distributors and expects the deal to prove accretive in the upcoming quarters.
However, dull performance in the European Pharmaceutical Solutions segment is a concern. McKesson’s escalating operating expenses are concerns. Regulatory headwinds in the United Kingdom and Canada have been strong deterrents in the recent past, especially in the U.S. Pharmaceutical and Specialty Solutions segment. Price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space add to the company’s woes.
Upcoming Releases from the MedTech Industry
A few better-ranked stocks in the MedTech space are Inogen, Inc (INGN - Free Report) , Baxter International Inc (BAX - Free Report) and Henry Schein, Inc (HSIC - Free Report) .
Inogen is expected to release third-quarter fiscal 2018 results on Nov 6. The Zacks Consensus Estimate is pegged at 52 cents for the quarter’s adjusted EPS and the same for revenues is pegged at $91.1. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for the period’s adjusted EPS is 74 cents and the same for revenues is pegged at $2.79 billion. The stock carries a Zacks Rank #2.
Henry Schein is slated to release third-quarter 2018 results on Nov 6. The Zacks Consensus Estimate for adjusted EPS is $1.01 for the to-be-reported quarter and the same for the top line is pegged at $3.36 billion. The stock carries a Zacks Rank #2.
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McKesson (MCK) Beats Q2 Earnings, Misses Revenue Estimates
McKesson Corporation (MCK - Free Report) reported second-quarter fiscal 2019 earnings of $3.60 per share, beating the Zacks Consensus Estimate of $3.28. Adjusted earnings improved 10% year over year.
McKesson posted sales of $53.08 billion, which missed the Zacks Consensus Estimate of $53.56 billion. The figure rose 1.9% on a year-over-year basis.
McKesson has a Zacks Rank #3 (Hold).
Segmental Analysis
Revenues in the U.S. Pharmaceutical and Specialty Solutions segment were $41.61 billion, up 2.5% year over year.
Revenues in the European Pharmaceutical Solutions segment amounted to $6.64 billion, down 2% year over year. Cutthroat competition in France marred growth in the segment.
Revenues in the Medical-Surgical Solutions segment totalled $1.95 billion, up 17.3% year over year.
Revenues in the Other segment were $2.88 billion in the fiscal second quarter, down 4.9% year over year. The lackluster performance in the segment is primarily due to the sale of the Enterprise Information Solutions business. However, the downtrend was partially offset by market growth and acquisitions.
McKesson Corporation Price and Consensus
McKesson Corporation Price and Consensus | McKesson Corporation Quote
Margins
Gross profit in the reported quarter was $2.8 billion, down 1% on a year-over-year basis. Gross margin was 5.3% of net revenues, down 10 basis points (bps).
U.S. Pharmaceutical and Specialty Solutions segment had adjusted operating profit of $610 million. Adjusted operating margin was 1.5% in the segment.
European Pharmaceutical Solutions segment had adjusted operating profit of $10 million. Adjusted operating margin was 0.2 % in the segment.
Medical-Surgical segment had adjusted operating profit of $105 million. Adjusted operating margin was 5.4% in the segment.
Adjusted operating profit was $95 million in the Other segment.
Guidance
McKesson raised guidance for fiscal 2019.
The company now expects adjusted earnings per share (EPS) of $13.20-$13.80 for fiscal 2019, up from the previous range of $13.00-$13.80. Notably, the Zacks Consensus Estimate for fiscal 2019 earnings is pegged at $13.31, within the guidance.
Wrapping Up
McKesson ended the second quarter of fiscal 2019 on a mixed note, beating the Zacks Consensus Estimate for earnings, while missing the same on the top-line front.
For investors’ notice, McKesson announced a multi-year strategic growth initiative update that is expected to generate approximately $300 million to $400 million in annual pre-tax gross savings. This will be substantially realized by the end of fiscal 2021.
The company has been riding on growth in the Medical-Surgical Solutions segment. McKesson is also a leading player in the pharmaceutical and medical supplies distribution market. The improvement in international sales is a positive. McKesson is progressing well with multi-year growth plan. Management is optimistic about the recently-closed acquisition of Medical Specialties Distributors and expects the deal to prove accretive in the upcoming quarters.
However, dull performance in the European Pharmaceutical Solutions segment is a concern. McKesson’s escalating operating expenses are concerns. Regulatory headwinds in the United Kingdom and Canada have been strong deterrents in the recent past, especially in the U.S. Pharmaceutical and Specialty Solutions segment. Price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space add to the company’s woes.
Upcoming Releases from the MedTech Industry
A few better-ranked stocks in the MedTech space are Inogen, Inc (INGN - Free Report) , Baxter International Inc (BAX - Free Report) and Henry Schein, Inc (HSIC - Free Report) .
Inogen is expected to release third-quarter fiscal 2018 results on Nov 6. The Zacks Consensus Estimate is pegged at 52 cents for the quarter’s adjusted EPS and the same for revenues is pegged at $91.1. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for the period’s adjusted EPS is 74 cents and the same for revenues is pegged at $2.79 billion. The stock carries a Zacks Rank #2.
Henry Schein is slated to release third-quarter 2018 results on Nov 6. The Zacks Consensus Estimate for adjusted EPS is $1.01 for the to-be-reported quarter and the same for the top line is pegged at $3.36 billion. The stock carries a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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