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) Q2 Earnings Miss Estimates, Revenues Rise Y/Y
Read MoreHide Full Article
McKesson Corporation (MCK - Free Report) reported second-quarter fiscal 2023 adjusted earnings per share (EPS) of $6.06, which lagged the Zacks Consensus Estimate of $6.13 per share by 1.1%. The bottom line declined 1.5% on a year-over-year basis.
GAAP earnings per share in the quarter were $6.46, up 277.8% from the year-ago quarter.
Revenue Details
Revenues of $70.16 billion surpassed the Zacks Consensus Estimate by 0.7%. The top line increased 5.4% year over year, reflecting strong growth in the United States, partially offset by lower international sales as the company continued to divest its European businesses.
Q2 Segmental Analysis
Following McKesson’s segment realignment effective in the quarter under review, the reporting segments are as follows:
Revenues at the U.S. Pharmaceutical and Specialty Solutions segment were $60.1 billion, up 12% year over year. Per management, the upside was primarily driven by market growth and a higher volume of specialty products, including an increase in volumes from retail national account customers. However, branded-to-generic conversions partially offset the upside.
The U.S. Pharmaceutical and Specialty Solutions segment reported an adjusted operating profit of $756 million, up 3% from the prior-year quarter. This was due to growth in the distribution of specialty products to providers and health systems, partially mitigated by lower demand for COVID-19 vaccine distribution. The adjusted metric for the segment was up 5%, excluding the impact of COVID-19 vaccine distribution.
At the International segment, revenues amounted to $6.2 billion, down 32% year over year, courtesy divestitures of McKesson’s UK and Austrian businesses.
McKesson Corporation Price, Consensus and EPS Surprise
Adjusted operating profit at the segment was $151 million, down 7% from the year-ago quarter.
Revenues at the Medical-Surgical Solutions segment totaled $2.8 billion, down 9% year over year due to lower sales of COVID-19 tests, partially offset by growth in the primary care business.
The Medical-Surgical segment delivered an adjusted operating profit of $307 million, which declined 4% from the year-ago quarter. Excluding the impact of COVID-related items, the adjusted metric was up 7%.
Revenues at the Prescription Technology Solutions segment totaled $1 billion, up 9% year over year. The improvement can be attributed to an increase in prescription from third-party logistics as well as higher technology services revenues.
Adjusted operating profit was $141 million at the Prescription Technology Solutions segment, down 2% from the prior-year quarter.
Margins
Gross profit in the reported quarter was $3.1 billion, down 7.7% on a year-over-year basis. Meanwhile, gross profit accounted for 4.4% of net revenues.
The company reported an operating income of $1.1 billion, up 108.5% from the year-ago quarter. Operating margin accounted for 1.6% of net revenues.
Financial Update
In the quarter under review, cash and cash equivalents were $2.92 billion, compared with $2.23 billion in the previous quarter.
Cumulative net cash provided in operating activities in the fiscal second quarter amounted to $166 million, down from $170 million in the year-ago period.
Fiscal 2023 Guidance Raised
For fiscal 2023, the company now projects adjusted EPS to be $24.45-$24.95, up from the previously guided range of $23.95-$24.65. The company raised the guidance following solid fiscal second-quarter results and increased contributions from the U.S. government’s COVID-19 response efforts. The Zacks Consensus Estimate for the same is pegged at $24.41.
The earnings outlook includes 60 cents to 70 cents associated with the U.S. government’s COVID-19 vaccine distribution and another $1.00 to $1.10 associated with the U.S. government’s kitting, storage and distribution of ancillary supplies program and COVID-19 tests. It also includes a negative impact of 15 cents related to year-to-date net gains and losses associated with McKesson Ventures' equity investments.
Summing Up
McKesson exited the fiscal second quarter on a mixed note, beating estimates for revenues but missing the same for earnings. However, the strong fiscal second quarter show across all its four segments is encouraging. A strong earnings outlook for fiscal 2023 instills optimism.
However, price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space are other headwinds.
Zacks Rank and Other Key Picks
Currently, McKesson carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Accuray (ARAY - Free Report) .
Elevance Health, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an earnings yield of 5.5% against the industry’s (2.3%). ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, having a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $384 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 22.7% for 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 22.04%.
Accuray reported fourth-quarter fiscal 2022 adjusted loss per share of 4 cents, which surpassed the Zacks Consensus Estimate by 33.3%. Fourth-quarter revenues of $110 million outpaced the Zacks Consensus Estimate by 4.9%. It currently has a Zacks Rank #2.
Accuray has an estimated growth rate of 100% for fiscal 2023. ARAY’s earnings surpassed estimates in three of the trailing four quarters and lagged the same in one, the average surprise being 20.8%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
McKesson (MCK) Q2 Earnings Miss Estimates, Revenues Rise Y/Y
McKesson Corporation (MCK - Free Report) reported second-quarter fiscal 2023 adjusted earnings per share (EPS) of $6.06, which lagged the Zacks Consensus Estimate of $6.13 per share by 1.1%. The bottom line declined 1.5% on a year-over-year basis.
GAAP earnings per share in the quarter were $6.46, up 277.8% from the year-ago quarter.
Revenue Details
Revenues of $70.16 billion surpassed the Zacks Consensus Estimate by 0.7%. The top line increased 5.4% year over year, reflecting strong growth in the United States, partially offset by lower international sales as the company continued to divest its European businesses.
Q2 Segmental Analysis
Following McKesson’s segment realignment effective in the quarter under review, the reporting segments are as follows:
Revenues at the U.S. Pharmaceutical and Specialty Solutions segment were $60.1 billion, up 12% year over year. Per management, the upside was primarily driven by market growth and a higher volume of specialty products, including an increase in volumes from retail national account customers. However, branded-to-generic conversions partially offset the upside.
The U.S. Pharmaceutical and Specialty Solutions segment reported an adjusted operating profit of $756 million, up 3% from the prior-year quarter. This was due to growth in the distribution of specialty products to providers and health systems, partially mitigated by lower demand for COVID-19 vaccine distribution. The adjusted metric for the segment was up 5%, excluding the impact of COVID-19 vaccine distribution.
At the International segment, revenues amounted to $6.2 billion, down 32% year over year, courtesy divestitures of McKesson’s UK and Austrian businesses.
McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote
Adjusted operating profit at the segment was $151 million, down 7% from the year-ago quarter.
Revenues at the Medical-Surgical Solutions segment totaled $2.8 billion, down 9% year over year due to lower sales of COVID-19 tests, partially offset by growth in the primary care business.
The Medical-Surgical segment delivered an adjusted operating profit of $307 million, which declined 4% from the year-ago quarter. Excluding the impact of COVID-related items, the adjusted metric was up 7%.
Revenues at the Prescription Technology Solutions segment totaled $1 billion, up 9% year over year. The improvement can be attributed to an increase in prescription from third-party logistics as well as higher technology services revenues.
Adjusted operating profit was $141 million at the Prescription Technology Solutions segment, down 2% from the prior-year quarter.
Margins
Gross profit in the reported quarter was $3.1 billion, down 7.7% on a year-over-year basis. Meanwhile, gross profit accounted for 4.4% of net revenues.
The company reported an operating income of $1.1 billion, up 108.5% from the year-ago quarter. Operating margin accounted for 1.6% of net revenues.
Financial Update
In the quarter under review, cash and cash equivalents were $2.92 billion, compared with $2.23 billion in the previous quarter.
Cumulative net cash provided in operating activities in the fiscal second quarter amounted to $166 million, down from $170 million in the year-ago period.
Fiscal 2023 Guidance Raised
For fiscal 2023, the company now projects adjusted EPS to be $24.45-$24.95, up from the previously guided range of $23.95-$24.65. The company raised the guidance following solid fiscal second-quarter results and increased contributions from the U.S. government’s COVID-19 response efforts. The Zacks Consensus Estimate for the same is pegged at $24.41.
The earnings outlook includes 60 cents to 70 cents associated with the U.S. government’s COVID-19 vaccine distribution and another $1.00 to $1.10 associated with the U.S. government’s kitting, storage and distribution of ancillary supplies program and COVID-19 tests. It also includes a negative impact of 15 cents related to year-to-date net gains and losses associated with McKesson Ventures' equity investments.
Summing Up
McKesson exited the fiscal second quarter on a mixed note, beating estimates for revenues but missing the same for earnings. However, the strong fiscal second quarter show across all its four segments is encouraging. A strong earnings outlook for fiscal 2023 instills optimism.
However, price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space are other headwinds.
Zacks Rank and Other Key Picks
Currently, McKesson carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Accuray (ARAY - Free Report) .
Elevance Health, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an earnings yield of 5.5% against the industry’s (2.3%). ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, having a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $384 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 22.7% for 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 22.04%.
Accuray reported fourth-quarter fiscal 2022 adjusted loss per share of 4 cents, which surpassed the Zacks Consensus Estimate by 33.3%. Fourth-quarter revenues of $110 million outpaced the Zacks Consensus Estimate by 4.9%. It currently has a Zacks Rank #2.
Accuray has an estimated growth rate of 100% for fiscal 2023. ARAY’s earnings surpassed estimates in three of the trailing four quarters and lagged the same in one, the average surprise being 20.8%.