SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Biotech / Medical : McKesson HBOC (MCK)
MCK 603.24+0.1%Jun 20 4:00 PM EDT

 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Rob Pierce who started this subject1/23/2001 5:33:07 PM
From: Paul Lee  Read Replies (1) of 165
 
McKesson: Co. 'Well-Positioned' On Generic
Drugs

Dow Jones Newswires

By Dinah Wisenberg Brin
Of DOW JONES NEWSWIRES

PHILADELPHIA -- McKesson HBOC Inc. (MCK), the country's largest
distributor of drugs and health-care products, posted fiscal third-quarter
results Tuesday that pleased Wall Street, despite missing analysts' consensus
estimate by a penny a share.

"We have a positive momentum building in our business," Chief Executive
John H. Hammergren said on a conference call with analysts.

The San Francisco company reported earnings from continuing operations,
excluding charges, of $69.3 million, or 24 cents a diluted share, compared
with earnings of $60.5 million, or 21 cents a share, in the same quarter the
previous year.

A First Call/Thomson Financial consensus of 18 analysts had estimated
earnings of 25 cents a share.

Analyst Leonard S. Yaffe of Banc of America Securities said he was pleased
with the results, which slightly exceeded his own estimate.

"Overall, it was a solid quarter and we saw nothing unusual relative to our
expectations," Yaffe said.

The stock had sold off in the past few weeks as investors worried McKesson
might miss analysts' estimates by a wide margin, he said.

"Now that the quarter came out and it was above our estimate, a penny
below consensus, I think people feel quite comfortable with the outlook of the
company, and we continue to rate the stock a buy," Yaffe said. He has a
12-month price target of $38 a share.

Analyst Ray Lewis of McDonald Investments Inc. liked the trends in
McKesson's two main businesses, supply management and information
technology.

"Both the revenue and margin trends in those businesses were slightly better
than what we had been looking for," Lewis said, though he noted that
McKesson's physician software unit, iMcKesson, posted a wider loss than
what he had expected.

Shares of McKesson were recently up $2.97, or 10.2%, at $31.97 a share
on the New York Stock Exchange on volume of 3.1 million shares. The
average daily volume is 1.7 million shares.

CEO Hammergren told analysts that McKesson should grow in the
low-to-middle double-digit range next year, which is in line with this quarter's
14% operating EPS growth. Profit margins should expand in the fourth
quarter and next fiscal year, but Hammergren wouldn't estimate by how much.

The company is "exceptionally well-positioned" to take advantage of the fact
that $48 billion worth of brand-name pharmaceuticals are coming off patent
and into the generic-drug realm over the next three years, Hammergren said,
citing its 7,000 independent-pharmacy customers.

In addition, Hammergren said that in the next several weeks, McKesson will
open its new comprehensive supply-management Web portal, which will
allow the company to expand its marketing opportunities to 7,000 customers
and reduce processing costs.

McKesson's supply-management and information-technology businesses are
building positive momentum, he said.

Revenue at the company's health-care IT unit, which supplies software and
networks to hospitals, fell 10.6% year-over-year to $199.8 million from
$223.6 million, but rose sequentially for the first time in six quarters. The IT
backlog also rose sequentially over the second quarter.

Operating profit at the health-care supply-management unit rose nearly 21%
before special items to $166.5 million from $137.9 million, while revenue rose
7.4% to $7 billion from $6.5 billion. The revenue comparison was affected by
heavy year-2000-related purchases that occurred in December 1999, the
company said.

David Mahoney, chief executive of subsidiary iMcKesson, told analysts that
the iMcKesson business is in the early stages of a turnaround, and that he was
pleased with the quarter. The full impact of its new contracts, however, won't
be seen until the next fiscal year, Mahoney said.

The unit posted a 2.4% rise in revenue, to $72.3 million from $70.6 million. It
had a $12.5 million operating loss, compared with a $4.1 million profit in the
year-ago quarter, both before special items.

-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285;
dinah.brin@dowjones.com
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext