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McKesson misses earnings, cuts outlook amid drug pricing scrutiny; shares plunge

Berkeley Lovelace Jr.

Shares of McKesson (MCK) plunged 22.67 percent Friday after the company posted earnings and revenue that missed forecasts.

The company also cut its outlook for the full-year amid recent drug pricing scrutiny in the U.S.

McKesson shares posted their worst session since April 1999 when it fell 47.5 percent.

The company reported fiscal second-quarter earnings on Thursday of $2.94 per share on revenue of $49.96 billion, missing expectations for $3.05 per share on sales of $51.43 billion.

The company lowered its full-year outlook to a range of between $12.35 a share and $12.85 a share, from a previous range of between $13.43 a share and $13.93 per share.

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"Our updated outlook for fiscal 2017 reflects McKesson's expectation of a lower profit contribution resulting from recent customer pricing activities and lower operating profit as a result of further moderating branded pharmaceutical pricing trends compared to previous expectations," Chairman and CEO John Hammergren said in a statement.

Several firms on Friday downgraded the stock. RW Baird downgraded it to "neutral" from "outperform" with a price target of $164 from $200. Leerink Partners downgraded the stock to "market perform" from "outperform," pricing it at $160 from $230. And Deutsche Bank downgrades it to a "hold" from a "buy" and priced it at $153 from $196.

After the earnings report, Cardinal Health (CAH)'s and AmerisourceBergen (ABC)'s shares, competitors to the company, also fell.

McKesson's stock is down 37 percent year-to-date.




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