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McKesson (MCK) Q4 Earnings Miss Estimates, Revenues Up Y/Y

McKesson Corporation MCK reported fourth-quarter fiscal 2024 adjusted earnings per share (EPS) of $6.18, which missed the Zacks Consensus Estimate of $6.34 by 2.52%. The bottom line also declined 14% on a year-over-year basis.

GAAP EPS was $6.02, up 5.4% from the year-ago quarter’s level.

Revenue Details

Revenues of $76.36 billion missed the Zacks Consensus Estimate by 3%. However, the top line increased 11% year over year, primarily driven by growth in the U.S. Pharmaceutical segment.

Full-Years Results

McKesson recorded combined total revenues of $309 billion in fiscal 2024, up 12.0% year over year. Adjusted EPS for fiscal 2024 was $27.44, up 6% year over year.

Q4 Segmental Analysis

Revenues in the U.S. Pharmaceutical segment totaled $68.8 billion, up 12% year over year. Per management, the upside was primarily driven by increased prescription volumes, including higher volumes from specialty products, retail national account customers, and GLP-1 medications.

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The U.S. Pharmaceutical and Specialty Solutions segment reported an adjusted operating profit of $901 million, up 5% from the prior-year quarter’s level. This was due to growth in the distribution of specialty products to providers and health systems and increased contributions from our generics program.

In the International segment, revenues amounted to $3.5 billion, up 6% year over year. This was due to higher pharmaceutical distribution volumes in the Canadian business.

Adjusted operating profit at the segment totaled $94 million, up 18% from the year-ago quarter’s figure.

Revenues in the Medical-Surgical Solutions segment totaled $2.8 billion, up 6% year over year. Sales were primarily driven by growth in the primary and extended care businesses but partially hurt by lower COVID-19-related sales.

The Medical-Surgical segment reported an adjusted operating profit of $248 million, flat year over year.

Revenues in the Prescription Technology Solutions segment totaled $1.2 billion, flat from that recorded a year ago. This was due to growth in the technology services business,

offset by lower contributions from the third-party logistics businesses.

The segment reported an adjusted operating profit of $212 million, down 3% from the prior-year quarter’s level. This was due to higher investments and expenses to support future growth across the biopharma services platform.

Margins

Gross profit in the reported quarter was $3.59 billion, up 16.9% on a year-over-year basis. The figure accounted for 4.7% of net revenues.

The company reported an operating income of $1.22 billion, up 24.1% from the year-ago quarter’s figure. Operating margin accounted for 1.6% of net revenues.

Financial Update

Cash and cash equivalents totaled $4.58 billion compared with $1.98 billion in the prior quarter.

Cumulative net cash provided by operating activities amounted to $4.31 billion for fiscal 2024 compared with $5.16 billion in fiscal 2023.

Fiscal 2025 Guidance

McKesson issued its adjusted EPS guidance for fiscal 2025. It now projects adjusted EPS in the range of $31.25-$32.05, which represents growth of 14% to 17% compared with fiscal 2024. The Zacks Consensus Estimate for the same is pegged at $31.06. Revenues are expected to grow 15-17% compared with fiscal 2024.

Summing Up

McKesson exited the fiscal fourth quarter of 2024 on a dismal note, with both earnings and revenues missing their respective Zacks Consensus Estimate. However, revenues reflected solid growth on the back of strong demand for its pharmaceuticals and strong performance in the International segment.

Meanwhile, lower COVID-19-related sales and lower contributions from third-party logistics businesses continue to hurt top and bottom-lines growth for the Medical-Surgical Solutions and Prescription Technology Solutions segments, respectively.

The price fluctuation of generic pharmaceuticals and stiff competition in the MedTech space remain as headwinds.

McKesson Corporation Price, Consensus and EPS Surprise

McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation Price, Consensus and EPS Surprise

McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote

Zacks Rank and Key Picks

McKesson currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. ALGN, Ecolab ECL and Boston Scientific Corporation BSX.

Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.

Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.

Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.

Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.

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Boston Scientific Corporation (BSX) : Free Stock Analysis Report

Ecolab Inc. (ECL) : Free Stock Analysis Report

Align Technology, Inc. (ALGN) : Free Stock Analysis Report

McKesson Corporation (MCK) : Free Stock Analysis Report

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