OREANDA-NEWS. July 30, 2012. McKesson Corporation (NYSE: MCK) reported that revenues for the first quarter ended June 30, 2012 were USD 30.8 billion, up 3% compared to USD 30.0 billion a year ago.  On the basis of U.S. generally accepted accounting principles (“GAAP”), first-quarter earnings per diluted share was USD 1.58 compared to USD 1.13 a year ago, reported the press-centre of McKesson.

As previously announced, first-quarter GAAP earnings include an USD 81 million pre-tax gain on business combination related to the acquisition of the remaining 50% ownership interest in McKesson’s corporate headquarters building.  This acquisition-related gain is excluded from the company’s calculation of Adjusted Earnings.  First-quarter GAAP results also include a pre-tax charge of USD 16 million, recorded in the Distribution Solutions segment, to increase an existing litigation reserve for claims against McKesson relating to First DataBank’s published drug reimbursement benchmarks, commonly referred to as Average Whole Prices (“AWP”).

First-quarter Adjusted Earnings per diluted share was USD 1.55, up 22% compared to USD 1.27 a year ago. 

For the first quarter, McKesson used cash in operations of USD 552 million, and ended the quarter with cash and cash equivalents of USD 2.0 billion.  During the first quarter the company paid USD 53 million in dividends, had internal capital spending of USD 84 million and spent USD 108 million on acquisitions. 

“I am pleased with McKesson’s first-quarter financial results,” said John H. Hammergren, chairman and chief executive officer.  “Our results this quarter represent a solid start to our fiscal year and we continue to expect that McKesson should achieve Adjusted Earnings per diluted share of USD 7.05 to USD 7.35.”

Distribution Solutions revenues were up 3% for the first quarter.  U.S. pharmaceutical distribution revenues were up 4% for the first quarter, primarily reflecting market growth and new business with existing customers.   

Canadian revenues, on a constant currency basis, decreased 4% for the first quarter primarily due to four fewer sales days.  Including the unfavorable currency impact of 4%, Canadian revenues decreased 8% for the first quarter. 

Medical-Surgical distribution and services revenues were up 9% for the first quarter, primarily driven by market growth and new customers.

In the first quarter, Distribution Solutions GAAP operating profit was USD 500 million and GAAP operating margin was 1.67%.  First-quarter adjusted operating profit was USD 553 million and the adjusted operating margin was 1.85%. 

Technology Solutions revenues were up 4% for the first quarter.  GAAP operating profit was USD 93 million for the first quarter and GAAP operating margin was 11.10%.  Adjusted operating profit was USD 109 million for the first quarter and adjusted operating margin was 13.01%.

Fiscal Year 2013 Outlook
McKesson continues to expect Adjusted Earnings per diluted share of USD 7.05 to USD 7.35 for the fiscal year ending March 31, 2013, which excludes the following GAAP items:

Amortization of acquisition-related intangible assets of approximately 54 cents per diluted share in Fiscal 2013.

Acquisition expenses and related adjustments expected to add approximately 19 cents per diluted share, including the impact of the \\$81 million gain on business combination related to the acquisition of the remaining 50% ownership in McKesson’s corporate headquarters building.

Litigation reserve adjustment of approximately four cents per diluted share.

Adjusted Earnings
McKesson separately reports financial results on the basis of Adjusted Earnings.  Adjusted Earnings is a non-GAAP financial measure defined as GAAP income from continuing operations, excluding amortization of acquisition-related intangible assets, acquisition expenses and related adjustments, and certain litigation reserve adjustments.  A reconciliation of McKesson’s financial results determined in accordance with GAAP to Adjusted Earnings is provided in Schedules 2, 3 and 4 of the financial statement tables included with this release.