We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
McKesson (MCK) Earnings and Revenues Beat Estimates in Q3
Read MoreHide Full Article
McKesson Corporation (MCK - Free Report) reported third-quarter fiscal 2021 adjusted earnings per share (EPS) of $4.60, which beat the Zacks Consensus Estimate of $4.13 per share by 11.4%. The bottom line also improved 20.7% on a year-over-year basis.
Revenues of $62.59 billion outpaced the Zacks Consensus Estimate by 1.2%. Further, the top line rose 5.8% year over year.
Q3 Segmental Analysis
Revenues at the U.S. Pharmaceutical and Specialty Solutions segment were $49.49 billion, up 6.5% year over year. Per management, the upside was primarily driven by market growth and increase in specialty volumes. However, branded to generic conversions partially offset the upside.
At the International segment, revenues amounted to $9.27 billion, down 6% year over year. Also, the metric decreased 10% at constant currency (cc) resulting from the contribution of McKesson’s German wholesale business to a joint venture with Walgreens Boots Alliance.
McKesson Corporation Price, Consensus and EPS Surprise
Revenues at the Medical-Surgical Solutions segment totaled $3.05 billion, up 42.6% year over year. Higher demand for COVID-19 tests in the Primary Care and Extended businesses contributed to the upside.
Revenues at the Prescription Technology Solutions segment totaled $777 million, up 8.8% year over year. New brand support programs and increase in volumes of the existing programs led to the improvement.
Margins
Gross profit in the reported quarter was $3.15 billion, up 3.9% on a year-over-year basis. Meanwhile, gross margin accounted for 5% of net revenues, down 10 basis points (bps) from the prior-year quarter.
The company reported operating loss of $7.36 billion against the year-ago quarter’s operating income of $360 million.
The U.S. Pharmaceutical and Specialty Solutions segment reported adjusted operating profit of $656 million, up 2% from the prior-year quarter. Adjusted operating margin was 1.3% at the segment.
Adjusted operating profit at the International segment was $158 million, up 9% from the year-ago quarter. Meanwhile, the adjusted operating margin at the segment was 1.7%.
The Medical-Surgical segment had adjusted operating profit of $279 million, which increased 52% from the year-ago quarter. Adjusted operating margin was 9.1% at the segment.
Adjusted operating profit was $131 million at the Prescription Technology Solutions segment, up 27% from the prior-year quarter. Adjusted operating margin was 16.9% at the segment.
Financial Update
In the quarter under review, cash and cash equivalents were $3.58 billion, up 15.9% sequentially.
Cumulative cash provided in operating activities for the fiscal third quarter amounted to $1.17 billion against cash used in operating activities worth $280 million in the year-ago period.
Fiscal 2021 Guidance Raised
For fiscal 2021, McKesson projects adjusted earnings per share to be $16.95-$17.25 (up from the previously guided range of $16-$16.50). The Zacks Consensus Estimate for the same is pegged at $16.33.
The abovementioned guidance assumes 25-35 cents associated to COVID-19 vaccine distribution and 20-30 cents with respect to kitting and storage of ancillary supplies for COVID-19 vaccines.
Summing Up
McKesson exited the fiscal third quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. Strong fiscal third-quarter show by three out of four of the segments remains a positive.
In the quarter under review, McKesson introduced Ontada — an oncology technology and insights business under the purview of U.S. Pharmaceutical segment. This business has been developed to lend support to innovation, advancement and evidence generation that can result in better outcomes for cancer patients.
Notably, the company’s board of directors authorized an additional share repurchase program worth $2 billion, indicating confidence in its diversified capital allocation strategy.
Meanwhile, contraction in gross margin is a woe. Weakness in International segment raises concern. Price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space remain headwinds.
Zacks Rank
Currently, McKesson carries a Zacks Rank #3 (Hold).
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Hologic, Inc. (HOLX - Free Report) , Abbott Laboratories (ABT - Free Report) and AngioDynamics, Inc. (ANGO - Free Report) . While Hologic sports a Zacks Rank of 1 (Strong Buy), both Abbott and AngioDynamics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.
AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
McKesson (MCK) Earnings and Revenues Beat Estimates in Q3
McKesson Corporation (MCK - Free Report) reported third-quarter fiscal 2021 adjusted earnings per share (EPS) of $4.60, which beat the Zacks Consensus Estimate of $4.13 per share by 11.4%. The bottom line also improved 20.7% on a year-over-year basis.
Revenues of $62.59 billion outpaced the Zacks Consensus Estimate by 1.2%. Further, the top line rose 5.8% year over year.
Q3 Segmental Analysis
Revenues at the U.S. Pharmaceutical and Specialty Solutions segment were $49.49 billion, up 6.5% year over year. Per management, the upside was primarily driven by market growth and increase in specialty volumes. However, branded to generic conversions partially offset the upside.
At the International segment, revenues amounted to $9.27 billion, down 6% year over year. Also, the metric decreased 10% at constant currency (cc) resulting from the contribution of McKesson’s German wholesale business to a joint venture with Walgreens Boots Alliance.
McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote
Revenues at the Medical-Surgical Solutions segment totaled $3.05 billion, up 42.6% year over year. Higher demand for COVID-19 tests in the Primary Care and Extended businesses contributed to the upside.
Revenues at the Prescription Technology Solutions segment totaled $777 million, up 8.8% year over year. New brand support programs and increase in volumes of the existing programs led to the improvement.
Margins
Gross profit in the reported quarter was $3.15 billion, up 3.9% on a year-over-year basis. Meanwhile, gross margin accounted for 5% of net revenues, down 10 basis points (bps) from the prior-year quarter.
The company reported operating loss of $7.36 billion against the year-ago quarter’s operating income of $360 million.
The U.S. Pharmaceutical and Specialty Solutions segment reported adjusted operating profit of $656 million, up 2% from the prior-year quarter. Adjusted operating margin was 1.3% at the segment.
Adjusted operating profit at the International segment was $158 million, up 9% from the year-ago quarter. Meanwhile, the adjusted operating margin at the segment was 1.7%.
The Medical-Surgical segment had adjusted operating profit of $279 million, which increased 52% from the year-ago quarter. Adjusted operating margin was 9.1% at the segment.
Adjusted operating profit was $131 million at the Prescription Technology Solutions segment, up 27% from the prior-year quarter. Adjusted operating margin was 16.9% at the segment.
Financial Update
In the quarter under review, cash and cash equivalents were $3.58 billion, up 15.9% sequentially.
Cumulative cash provided in operating activities for the fiscal third quarter amounted to $1.17 billion against cash used in operating activities worth $280 million in the year-ago period.
Fiscal 2021 Guidance Raised
For fiscal 2021, McKesson projects adjusted earnings per share to be $16.95-$17.25 (up from the previously guided range of $16-$16.50). The Zacks Consensus Estimate for the same is pegged at $16.33.
The abovementioned guidance assumes 25-35 cents associated to COVID-19 vaccine distribution and 20-30 cents with respect to kitting and storage of ancillary supplies for COVID-19 vaccines.
Summing Up
McKesson exited the fiscal third quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. Strong fiscal third-quarter show by three out of four of the segments remains a positive.
In the quarter under review, McKesson introduced Ontada — an oncology technology and insights business under the purview of U.S. Pharmaceutical segment. This business has been developed to lend support to innovation, advancement and evidence generation that can result in better outcomes for cancer patients.
Notably, the company’s board of directors authorized an additional share repurchase program worth $2 billion, indicating confidence in its diversified capital allocation strategy.
Meanwhile, contraction in gross margin is a woe. Weakness in International segment raises concern. Price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space remain headwinds.
Zacks Rank
Currently, McKesson carries a Zacks Rank #3 (Hold).
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Hologic, Inc. (HOLX - Free Report) , Abbott Laboratories (ABT - Free Report) and AngioDynamics, Inc. (ANGO - Free Report) . While Hologic sports a Zacks Rank of 1 (Strong Buy), both Abbott and AngioDynamics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.
AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>