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McKesson (MCK) to Report Q2 Earnings: What's in the Cards?

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McKesson Corporation (MCK - Free Report) is scheduled to report second-quarter fiscal 2022 results on Nov 1, after the opening bell.

The company delivered an earnings surprise of 35.9% in the last reported quarter. It beat estimates in each of the trailing four quarters, the average surprise being 17.9%.

Q2 Estimates

The Zacks Consensus Estimate for McKesson’s fiscal second-quarter earnings per share is pegged at $4.59, suggesting a decline of 4.4% from the prior-year quarter. The same for revenues stands at $62.76 billion, indicating an improvement of 3.2% from the year-ago reported figure.

Factors to Note

McKesson expects fiscal second-quarter results to reflect segmental strength.

The U.S. Pharmaceutical and Specialty Solutions segment might have acted as a key growth driver in the quarter to be reported. In fact, the consensus mark for this segment’s revenues is pegged at $50.89 billion, indicating an improvement of 5.9% from the prior-year quarter.

The segment may have benefited from market growth and higher volumes from retail national account customers in the to-be-reported quarter. However, branded to generic conversions might have weighed on the segment’s performance. Nonetheless, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers is expected to have contributed to the fiscal second-quarter performance.

Growing demand for COVID-19 tests and improvement in primary care patient visits are likely to have favored the company’s Medical-Surgical solutions segment.

McKesson Corporation Price and EPS Surprise

McKesson Corporation Price and EPS Surprise

McKesson Corporation price-eps-surprise | McKesson Corporation Quote

McKesson’s collaboration with the U.S. government's COVID-19 vaccine distribution effort highlighted the company’s role in the COVID-19 response. It was selected by the U.S. government as the centralized distributor of refrigerated and frozen COVID-19 vaccines and the ancillary kits used to administer those vaccines.

Per the fiscal first-quarter 2022 earnings call, the company’s U.S. and international distribution businesses have been playing a key role in the pandemic response. Meanwhile, its growing partnership with the United States government's COVID-19 vaccine distribution efforts reflects operational excellence and capabilities.

Through July 2021, McKesson’s US Pharmaceutical business successfully distributed above 185 million Moderna and J&J COVID-19 vaccines to administration sites across the United States. The company’s medical business has gathered enough kits to support the administration of above 785 million doses for all vaccine types.

In the fiscal first quarter of 2022, the United States government asked McKesson to support their mission of sending millions of COVID-19 vaccines to countries in need across the globe. Again, through July, the company successfully prepared more than 65 million COVID-19 vaccines for shipment abroad. McKesson’s presence in Europe and Canada continues to grow as it partners with local governments to distribute and administer COVID-19 vaccines there as well. Through July, the company distributed more than 45 million vaccines to administration sites in select markets throughout these geographies.

These positive developments may get reflected in the fiscal second-quarter results.

With respect to the company’s corporate segment, opioid-related costs are expected to be around $155 million for fiscal 2022 (it incurred $35 million in the fiscal first quarter). Given the higher opioid-related costs and increased investment in the business, the company now estimates corporate expenses between $670 million and $720 million. Consequently, the fiscal second-quarter results are likely to reflect the impact of the same.

What the Zacks Model Unveils

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.

Earnings ESP: McKesson has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Insulet Corporation (PODD - Free Report) has an Earnings ESP of +15.79% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Canopy Growth Corporation (CGC - Free Report) has an Earnings ESP of +26.83% and a Zacks Rank of 3.

Cardiovascular Systems, Inc. (CSII - Free Report) has an Earnings ESP of +24.59% and a Zacks Rank of 3.