McKesson 3Q net income slips on charges

NEW YORK -- McKesson Corp., which distributes prescription drugs and provides information technology services, said Thursday that its net income slipped 1 percent in the fiscal third quarter because of a legal charge affecting its Canadian operations and a product charge that hurt its technology business.

Excluding the charges McKesson's net income still fell short of what Wall Street expected. But revenue growth topped expectations, helped by gains in the company's U.S. pharmaceutical direct distribution and services business. Medical-surgical distribution revenue jumped 15 percent, driven by market growth, new customers, acquisitions and one additional sales day.

The company's net income slipped to $298 million from $300 million over the three months ended Dec. 31. McKesson had fewer shares on the market in the fourth quarter than it did a year ago because of stock repurchases; thus its per-share income rose to $1.27 from $1.22.

Excluding a $40 million charge related to the legal dispute and $42 million in product alignment charges for the technology business, McKesson said it earned $1.41 per share, below the $1.63 expected by analysts polled by FactSet.

However, revenue grew 1 percent to $31.19 billion from $30.84 billion, coming in ahead of the $30.79 billion forecast by analysts.

McKesson narrowed its fiscal-year profit outlook, and said it now expects to earn $7.10 to $7.30 per share. Its previous guidance called for net income of $7.05 to $7.35 per share, and analysts expect $7.30 per share on average.

McKesson also said it approved the repurchase of another $500 million in stock.

Shares of McKesson lost 42 cents to close at $105.23 and fell $2.35 to $102.88 in aftermarket trading following the report.