Yahoo Finance McKesson (MCK) Q4 Earnings Beat Estimates, U.S. Sales Strong
McKesson Corporation MCK reported fiscal fourth-quarter 2023 adjusted earnings per share (EPS) of $7.19, which beat the Zacks Consensus Estimate of $7.16 by 0.4%. The bottom line improved 23.3% on a year-over-year basis.
GAAP EPS was $5.71, up 130.2% from the year-ago quarter’s level.
Revenue Details
Revenues of $68.91 billion beat the Zacks Consensus Estimate by 1.1%. The top line increased 4.2% year over year, reflecting strong growth in the United States. This was partially offset by lower international sales due to divestitures of its European businesses.
Q4 Segmental Analysis
Revenues at the U.S. Pharmaceutical segment were $61.68 billion, up 14.9% 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 segment reported an adjusted operating profit of $861 million, up 10.4% from the prior-year quarter’s level. 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 9%, excluding the impact of the abovementioned vaccine’s distribution.
At the International segment, revenues amounted to $3.36 billion, down 60.6% year over year. This was due to divestitures of McKesson’s European businesses.
Adjusted operating profit at the segment totaled $88 million, down 45.6% from the year-ago quarter’s figure.
Revenues at the Medical-Surgical Solutions segment totaled $2.69 billion, down 6.4% year over year. This was due to lower COVID-19-related sales, partially offset by growth in the primary and extended care business.
The Medical-Surgical segment reported an adjusted operating profit of $248 million, down 17% year over year. Excluding the impact of COVID-related items, the adjusted metric was up 2%.
Revenues at the Prescription Technology Solutions segment totaled $1.18 billion, up 15.9% from that recorded a year ago. The improvement can be attributed to higher technology services revenues and an increase in prescriptions from third-party logistics.
Adjusted operating profit came in at $218 million at the Prescription Technology Solutions segment, up 34.6% from the prior-year quarter’s level.
McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote
Margins
Gross profit in the reported quarter was $3.07 billion, down 7.6% on a year-over-year basis. The figure accounted for 4.4% of net revenues.
The company reported an operating income of $980 million, up 54.8% from the year-ago quarter’s figure. Operating margin accounted for 1.4% of net revenues.
Financial Update
In the quarter under review, cash and cash equivalents were $4.67 billion compared with $2.77 billion in the previous quarter.
Cumulative net cash provided by operating activities amounted to $5.16 billion, up from $4.43 billion recorded in the year-ago period.
Fiscal 2024 Guidance
McKesson provided its adjusted earnings guidance for fiscal 2024. It projects adjusted EPS to be in the range of $26.10-$26.90. The Zacks Consensus Estimate for the same is pegged at $26.30.
Summing Up
McKesson exited the fiscal fourth quarter of 2023 on a strong note, wherein it beat both earnings and revenue estimates. The outperformance reflects strong demand for its pharmaceuticals and prescription technology solutions.
However, lower COVID-19 related sales and divesture of European businesses hurt top and bottom-line growth for Medical-Surgical Solutions and International segments, respectively.
The company expects the impact of COVID-related sales and divesture to be lower in fiscal 2024. A strong earnings outlook for the year raises optimism.
However, price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space are strong headwinds.
Zacks Rank and Stocks to Consider
McKesson currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are AmerisourceBergen Corporation ABC, Merit Medical Systems, Inc. MMSI and Cardinal Health, Inc. CAH.
AmerisourceBergen carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company reported fiscal second-quarter 2023 adjusted EPS of $3.50, which beat the Zacks Consensus Estimate by 6.4%. Revenues of $63.46 billion outpaced the consensus mark by 4.4%.
AmerisourceBergen has a long-term estimated growth rate of 8.7%. ABC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.1%.
Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the consensus mark by 5.9%. The company currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 20.2%.
Cardinal Health reported fiscal third-quarter 2023 adjusted EPS of $1.74, which beat the Zacks Consensus Estimate by 17.6%. Revenues of $50.49 billion surpassed the consensus mark by 1.7%. The company carries a Zacks Rank #2 at present.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 12.3%.
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