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McKesson (MCK) Beats on Q1 Earnings, Reiterates '19 View
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McKesson (MCK - Free Report) reported first-quarter fiscal 2019 earnings of $2.90 per share, beating the Zacks Consensus Estimate of $2.89. Adjusted earnings improved 17.9% year over year.
McKesson posted sales of $52.61 billion, lagging the Zacks Consensus Estimate for revenues of $53.04 billion. The figure rose 3% on a year-over-year basis.
In the past year, shares of McKesson have declined 19.9% against the industry’s rise of 6.1%. The current level is also lower than the S&P 500 index’s rise of 15.5%. The stock has a Zacks Rank #3 (Hold).
McKesson Corporation Price, Consensus and EPS Surprise
U.S. Pharmaceutical and Specialty Solutions revenues were $41 billion for the quarter, up 2% year over year. The upside came from market growth and acquisitions, partially offset by previously announced customer losses and branded to generic conversions.
European Pharmaceutical Solutions revenues were $6.9 billion for the quarter, up 9% on a reported basis and 1% at constant currency (cc). Cutthroat competition in France hampered growth in the segment.
Medical-Surgical Solutions revenues were $1.7 billion for the quarter, up 11% year over year.
Other revenues were $3 billion for the first quarter, up 5% year over year. The figure grew 1% at cc. The segment witnessed solid regulatory hurdles in the McKesson Canada business.
Margins
Gross profit in the reported quarter was $2.78 billion, up 8.6% on a year-over-year basis. Gross margin was 5.3% of net revenues, up 30 basis points (bps).
U.S. Pharmaceutical and Specialty Solutions segment had adjusted operating profit of $540 million. Adjusted operating margin was 1.3% in the segment.
European Pharmaceutical Solutions segment had adjusted operating profit of $69 million at cc. Adjusted operating margin was 1.1 % in the segment.
Medical-Surgical segment had adjusted operating profit of $125 million. Adjusted operating margin was 7.3 % in the segment.
At cc, adjusted operating profit was $204 million in the Other segment.
Guidance
McKesson reiterated guidance for fiscal 2019.
The company expects adjusted earnings per share of $13.00-$13.80 for fiscal 2019. Notably, the Zacks Consensus Estimate for fiscal 2019 earnings is pegged at $13.39, within the given range.
Our Take
McKesson wrapped up the first quarter of fiscal 2019 on a favorable note, beating the Zacks Consensus Estimate for earnings. The company has been riding on growth in the Medical-Surgical Solutions segment. The improvement in international sales is also a positive.
Moreover, 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 quarters ahead.
However, McKesson’s escalating operating expenses raise concern. Government-driven headwinds in the U.K. and Canada were deterrents in the recent past. Consequently, the company expects low single-digit growth at its segments in fiscal 2019. Price fluctuation of generic pharmaceuticals and stiff competition in the niche space add to the woes.
Upcoming Releases
A few better-ranked stocks in the broader medical space slated to release results are Insulet Corp. (PODD - Free Report) , Wright Medical Group N.V. and Illumina, Inc (ILMN - Free Report) .
Insulet is expected to release second-quarter fiscal 2018 results on Aug 2. The Zacks Consensus Estimate for the quarter’s loss per share is pegged at 13 cents and the same for revenues is at $132.9 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Wright Medical is expected to release second-quarter 2018 results on Aug 8. The Zacks Consensus Estimate for the top line is pegged at $197.1 million, showing an improvement of 9.7% year over year. The stock sports a Zacks Rank of 1.
Illumina is slated to release second-quarter 2018 results on Jul 30. The Zacks Consensus Estimate for the bottom line is pegged at $1.11 and the same for revenues is at $787.7 million. The company is a Zacks #1 Ranked player.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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McKesson (MCK) Beats on Q1 Earnings, Reiterates '19 View
McKesson (MCK - Free Report) reported first-quarter fiscal 2019 earnings of $2.90 per share, beating the Zacks Consensus Estimate of $2.89. Adjusted earnings improved 17.9% year over year.
McKesson posted sales of $52.61 billion, lagging the Zacks Consensus Estimate for revenues of $53.04 billion. The figure rose 3% on a year-over-year basis.
In the past year, shares of McKesson have declined 19.9% against the industry’s rise of 6.1%. The current level is also lower than the S&P 500 index’s rise of 15.5%. The stock has a Zacks Rank #3 (Hold).
McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation Price, Consensus and EPS Surprise | McKesson Corporation Quote
Quarter in Detail
U.S. Pharmaceutical and Specialty Solutions revenues were $41 billion for the quarter, up 2% year over year. The upside came from market growth and acquisitions, partially offset by previously announced customer losses and branded to generic conversions.
European Pharmaceutical Solutions revenues were $6.9 billion for the quarter, up 9% on a reported basis and 1% at constant currency (cc). Cutthroat competition in France hampered growth in the segment.
Medical-Surgical Solutions revenues were $1.7 billion for the quarter, up 11% year over year.
Other revenues were $3 billion for the first quarter, up 5% year over year. The figure grew 1% at cc. The segment witnessed solid regulatory hurdles in the McKesson Canada business.
Margins
Gross profit in the reported quarter was $2.78 billion, up 8.6% on a year-over-year basis. Gross margin was 5.3% of net revenues, up 30 basis points (bps).
U.S. Pharmaceutical and Specialty Solutions segment had adjusted operating profit of $540 million. Adjusted operating margin was 1.3% in the segment.
European Pharmaceutical Solutions segment had adjusted operating profit of $69 million at cc. Adjusted operating margin was 1.1 % in the segment.
Medical-Surgical segment had adjusted operating profit of $125 million. Adjusted operating margin was 7.3 % in the segment.
At cc, adjusted operating profit was $204 million in the Other segment.
Guidance
McKesson reiterated guidance for fiscal 2019.
The company expects adjusted earnings per share of $13.00-$13.80 for fiscal 2019. Notably, the Zacks Consensus Estimate for fiscal 2019 earnings is pegged at $13.39, within the given range.
Our Take
McKesson wrapped up the first quarter of fiscal 2019 on a favorable note, beating the Zacks Consensus Estimate for earnings. The company has been riding on growth in the Medical-Surgical Solutions segment. The improvement in international sales is also a positive.
Moreover, 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 quarters ahead.
However, McKesson’s escalating operating expenses raise concern. Government-driven headwinds in the U.K. and Canada were deterrents in the recent past. Consequently, the company expects low single-digit growth at its segments in fiscal 2019. Price fluctuation of generic pharmaceuticals and stiff competition in the niche space add to the woes.
Upcoming Releases
A few better-ranked stocks in the broader medical space slated to release results are Insulet Corp. (PODD - Free Report) , Wright Medical Group N.V. and Illumina, Inc (ILMN - Free Report) .
Insulet is expected to release second-quarter fiscal 2018 results on Aug 2. The Zacks Consensus Estimate for the quarter’s loss per share is pegged at 13 cents and the same for revenues is at $132.9 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Wright Medical is expected to release second-quarter 2018 results on Aug 8. The Zacks Consensus Estimate for the top line is pegged at $197.1 million, showing an improvement of 9.7% year over year. The stock sports a Zacks Rank of 1.
Illumina is slated to release second-quarter 2018 results on Jul 30. The Zacks Consensus Estimate for the bottom line is pegged at $1.11 and the same for revenues is at $787.7 million. The company is a Zacks #1 Ranked player.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>