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McKesson (MCK) to Report Q4 Earnings: What's in the Cards?

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McKesson Corporation (MCK - Free Report) is scheduled to report fourth-quarter fiscal 2022 results on Feb 5, after the opening bell.

The company delivered an earnings surprise of 14.3% in the last reported quarter. It beat estimates in each of the trailing four quarters, the average surprise being 20.6%.

Q4 Estimates

The Zacks Consensus Estimate for McKesson’s fiscal fourth-quarter earnings per share is pegged at $6.06, suggesting growth of 20% from the prior-year quarter. The same for revenues stands at $63.72 billion, indicating an improvement of 7.7% from the year-ago reported figure.

Factors to Note

McKesson expects fiscal fourth-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 $51.90 billion, indicating an improvement of 10.3% 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 fourth-quarter performance.

McKesson Corporation Price and EPS Surprise

McKesson Corporation Price and EPS Surprise

McKesson Corporation price-eps-surprise | McKesson Corporation Quote

Growth and improvement in the primary care business, and contribution from kitting, storage, and distribution of ancillary supplies for the U.S. government's COVID-19 vaccine program are likely to have positively impacted the company’s Medical-Surgical solutions segment.

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.

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 Jan 31, the company successfully distributed more than 370 million COVID-19 vaccines on behalf of the U.S. government, including vaccine distribution in the United States and related to the U.S. government’s international donation mission. In fact, in January 2022, the United States government extended the existing COVID-19 vaccine distribution contract through July of 2022 (approximately in line with McKesson’s fiscal first quarter of 2023). The company’s continues to reap benefits from COVID-19-related programs in Canada and European operations. Through December 2021, McKesson distributed more than 81 million vaccines to administration sites in select markets throughout these geographies.

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

With respect to the company’s corporate segment, opioid-related costs are expected to be around $135 million for fiscal 2022 (it incurred $33 million in the fiscal third quarter). Given the higher opioid-related costs and increased investment in the business, the company now estimates corporate expenses between $570 million and $620 million. Consequently, the fiscal fourth-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 -0.44%. 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.

Zimmer Biomet Holdings, Inc. (ZBH - Free Report) has an Earnings ESP of +0.81% and a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank stocks here.

Zimmer Biomet's long-term earnings growth rate is estimated at 5.8%. The company's earnings yield of 5.4% compares favorably with the industry's 0.9%.

Haemonetics Corporation (HAE - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank of 3.

Haemonetics' long-term earnings growth rate is estimated at 10%. The company's earnings yield of 5.5% compares favorably with the industry's 0.9%.

Meridian Bioscience, Inc. (VIVO - Free Report) has an Earnings ESP of +26.32% and a Zacks Rank of 2.

Meridian Bioscience's historical earnings growth rate stands at 16.3%. The company's earnings yield of 5.4% compares favorably with the industry's 0.9%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.