McKesson Corporation (NYSE:MCK) Surpasses Market Expectations

McKesson Corporation (NYSE:MCK) stock rose 4.43% (As on August 4, 11:43:05 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the first quarter of FY 23. The Irving, Texas-based drug distributor and medical services provider reported net income of $768 million in the quarter, compared with $486 million in the same period a year earlier. The median forecast by analysts surveyed by FactSet was for net income of $770 million. The company reported net claims and litigation charges of $5 million, down from $74 million in the year-earlier quarter, while net restructuring, impairment and related charges dropped to $23 million from $158 million a year earlier. Selling, distribution, general and administrative expenses fell to $1.96 billion from $2.23 billion.

MCK in the first quarter of FY 23 has reported the adjusted earnings per share of $5.83, beating the analysts’ estimates for the adjusted earnings per share of $5.31, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 7 percent to $67.15 billion in the first quarter of FY 23, beating the analysts’ estimates for revenue of $64.9 billion. This is driven by growth in the U.S. Pharmaceutical segment, resulting from increased specialty product volumes, including retail national account customers, and market growth, partially offset by lower revenues in the International segment as a result of the planned progress with McKesson’s divestiture of its European businesses. U.S. Pharmaceutical Segment first-quarter revenues were $56.9 billion, an increase of 14%. Prescription Technology Solutions Segment first-quarter revenues were $1.1 billion, an increase of 21%. Medical-Surgical Solutions Segment first-quarter revenues were $2.6 billion, an increase of 3%. International Segment first-quarter revenues were $6.5 billion.

Additionally, for the first three months of the fiscal year, McKesson returned $1.1 billion of cash to shareholders, which included $1.0 billion of common stock repurchases and $71 million of dividend payments. During the first three months of the fiscal year, McKesson used cash from operations of $941 million, and invested $100 million in capital expenditures, resulting in negative Free Cash Flow of $1.0 billion. The company has declared a 15% increase to its quarterly dividend from $0.47 per share to $0.54 per share. On July 22, 2022, McKesson’s Board of Directors authorized the company to repurchase up to an additional $4.0 billion of its common shares. Fiscal 2023 Adjusted Earnings per Diluted Share guidance continues to assume approximately $3.5 billion of share repurchases.

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