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McKesson (MCK) Q4 Earnings Beat Estimates, Revenues Miss
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McKesson Corporation (MCK - Free Report) reported fourth-quarter fiscal 2021 adjusted earnings per share (EPS) of $5.05, which beat the Zacks Consensus Estimate of $5.02 per share by 0.6%. The bottom line also improved 18.3% on a year-over-year basis.
For fiscal 2021, the company reported adjusted EPS of $17.21, up 15.1% from the year-ago period. The bottom line beat the consensus mark by 0.1%.
Revenue Details
Revenues of $59.14 billion missed the Zacks Consensus Estimate by 2.9%. However, the top line increased 1% year over year.
For fiscal 2021, the company’s revenues amounted to $238.23 billion, up 3.1% from the prior-year period. However, the figure missed the Zacks Consensus Estimate by 0.6%.
Q4 Segmental Analysis
Revenues at the U.S. Pharmaceutical and Specialty Solutions segment were $47.04 billion, up 2.6% year over year. Also, the metric improved 3% at constant currency (cc). Per management, the upside was primarily driven by market growth and increase in volumes from retail national account customers. However, prior-year acceleration in demand due to the onset of the pandemic and branded to generic conversions partially offset the upside.
At the International segment, revenues amounted to $8.60 billion, down 11.8% year over year. Also, the metric fell 18% at cc on account of 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 $2.71 billion, up 22.9% year over year. Higher demand for COVID-19 tests contributed to the upside.
Revenues at the Prescription Technology Solutions segment totaled $789 million, up 7.2% year over year. Increase in volumes of technology and service offerings to lend support to biopharma customers led to the improvement.
Margins
Gross profit in the reported quarter was $3.29 billion, down 1.2% on a year-over-year basis. Meanwhile, gross margin accounted for 5.6% of net revenues, down 10 basis points (bps) from the prior-year quarter.
The company reported operating income of $1.01 billion, up 16.2% from the year-ago quarter. Operating margin accounted for 1.7% of net revenues, up 20 basis points (bps) from the prior-year quarter.
The U.S. Pharmaceutical and Specialty Solutions segment reported adjusted operating profit of $813 million, up 7% from the prior-year quarter.
Adjusted operating profit at the International segment was $126 million, down 8% from the year-ago quarter.
The Medical-Surgical segment had adjusted operating profit of $192 million, which increased 13% from the year-ago quarter.
Adjusted operating profit was $146 million at the Prescription Technology Solutions segment, up 11% from the prior-year quarter.
Financial Update
In the quarter under review, cash and cash equivalents were $6.28 billion, compared to $3.58 billion in the previous quarter.
Cumulative cash provided in operating activities for the fiscal fourth quarter amounted to $4.54 billion compared to that of $4.37 billion in the year-ago period.
Fiscal 2022 Guidance
For fiscal 2022, McKesson projects adjusted earnings per share to be $18.85-$19.45, indicating 9.5-13% growth. The Zacks Consensus Estimate for the same is pegged at $18.81.
The abovementioned guidance assumes 50-70 cents associated to COVID-19 vaccine distribution and kitting programs.
Summing Up
McKesson exited the fiscal fourth quarter on a mixed note, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. Strong fiscal fourth-quarter show by three of the four segments remains a positive. Expansion in operating margin is a positive.
In the quarter under review, McKesson continued to make investments in Ontada — an oncology technology and insights business under the purview of U.S. Pharmaceutical segment, while joining MYLUNG, which is a collaborative real-world research consortium developed to accelerate precision medicine for non-small cell lung cancer patients.
Further, Medical-Surgical Solutions segment played a key role in the COVID-19 response efforts, assembling and distributing the ancillary supply kits required for COVID-19 vaccinations and distributing COVID-19 tests to healthcare provider customers.
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).
Integer Holdings reported first-quarter 2021 adjusted EPS of 97 cents, which surpassed the Zacks Consensus Estimate by 12.8%. First-quarter revenues of $290.5 million outpaced the Zacks Consensus Estimate by 2.6%.
Boston Scientific reported first-quarter 2020 adjusted EPS of 37 cents, which beat the Zacks Consensus Estimate by 32.1%. First-quarter revenues of $2.75 billion outpaced the consensus mark by 5.3%.
HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%.
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McKesson (MCK) Q4 Earnings Beat Estimates, Revenues Miss
McKesson Corporation (MCK - Free Report) reported fourth-quarter fiscal 2021 adjusted earnings per share (EPS) of $5.05, which beat the Zacks Consensus Estimate of $5.02 per share by 0.6%. The bottom line also improved 18.3% on a year-over-year basis.
For fiscal 2021, the company reported adjusted EPS of $17.21, up 15.1% from the year-ago period. The bottom line beat the consensus mark by 0.1%.
Revenue Details
Revenues of $59.14 billion missed the Zacks Consensus Estimate by 2.9%. However, the top line increased 1% year over year.
For fiscal 2021, the company’s revenues amounted to $238.23 billion, up 3.1% from the prior-year period. However, the figure missed the Zacks Consensus Estimate by 0.6%.
Q4 Segmental Analysis
Revenues at the U.S. Pharmaceutical and Specialty Solutions segment were $47.04 billion, up 2.6% year over year. Also, the metric improved 3% at constant currency (cc). Per management, the upside was primarily driven by market growth and increase in volumes from retail national account customers. However, prior-year acceleration in demand due to the onset of the pandemic and branded to generic conversions partially offset the upside.
At the International segment, revenues amounted to $8.60 billion, down 11.8% year over year. Also, the metric fell 18% at cc on account of 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 $2.71 billion, up 22.9% year over year. Higher demand for COVID-19 tests contributed to the upside.
Revenues at the Prescription Technology Solutions segment totaled $789 million, up 7.2% year over year. Increase in volumes of technology and service offerings to lend support to biopharma customers led to the improvement.
Margins
Gross profit in the reported quarter was $3.29 billion, down 1.2% on a year-over-year basis. Meanwhile, gross margin accounted for 5.6% of net revenues, down 10 basis points (bps) from the prior-year quarter.
The company reported operating income of $1.01 billion, up 16.2% from the year-ago quarter. Operating margin accounted for 1.7% of net revenues, up 20 basis points (bps) from the prior-year quarter.
The U.S. Pharmaceutical and Specialty Solutions segment reported adjusted operating profit of $813 million, up 7% from the prior-year quarter.
Adjusted operating profit at the International segment was $126 million, down 8% from the year-ago quarter.
The Medical-Surgical segment had adjusted operating profit of $192 million, which increased 13% from the year-ago quarter.
Adjusted operating profit was $146 million at the Prescription Technology Solutions segment, up 11% from the prior-year quarter.
Financial Update
In the quarter under review, cash and cash equivalents were $6.28 billion, compared to $3.58 billion in the previous quarter.
Cumulative cash provided in operating activities for the fiscal fourth quarter amounted to $4.54 billion compared to that of $4.37 billion in the year-ago period.
Fiscal 2022 Guidance
For fiscal 2022, McKesson projects adjusted earnings per share to be $18.85-$19.45, indicating 9.5-13% growth. The Zacks Consensus Estimate for the same is pegged at $18.81.
The abovementioned guidance assumes 50-70 cents associated to COVID-19 vaccine distribution and kitting programs.
Summing Up
McKesson exited the fiscal fourth quarter on a mixed note, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. Strong fiscal fourth-quarter show by three of the four segments remains a positive. Expansion in operating margin is a positive.
In the quarter under review, McKesson continued to make investments in Ontada — an oncology technology and insights business under the purview of U.S. Pharmaceutical segment, while joining MYLUNG, which is a collaborative real-world research consortium developed to accelerate precision medicine for non-small cell lung cancer patients.
Further, Medical-Surgical Solutions segment played a key role in the COVID-19 response efforts, assembling and distributing the ancillary supply kits required for COVID-19 vaccinations and distributing COVID-19 tests to healthcare provider customers.
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 Integer Holdings Corporation (ITGR - Free Report) , Boston Scientific Corporation (BSX - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Integer Holdings reported first-quarter 2021 adjusted EPS of 97 cents, which surpassed the Zacks Consensus Estimate by 12.8%. First-quarter revenues of $290.5 million outpaced the Zacks Consensus Estimate by 2.6%.
Boston Scientific reported first-quarter 2020 adjusted EPS of 37 cents, which beat the Zacks Consensus Estimate by 32.1%. First-quarter revenues of $2.75 billion outpaced the consensus mark by 5.3%.
HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>