McKesson Shares Slide as Outlook Slashed

Shares of health-care giant McKesson Corp. slid in after-hours trading Thursday after the company sharply cut its profit outlook for the year as income dropped by half in its latest quarter.

The company said the latest results were affected by a "softer pricing environment" in its U.S. pharmaceutical business. Expenses also rose during the quarter.

The company also unveiled a $4 billion share-repurchase authorization.

McKesson said it now expects the year's adjusted earnings on a per-share basis to be $12.35 to $12.85, down from $13.43 to $13.93.

Shares dropped 11.5% to $142.1 after hours.

For the quarter ended Sept. 30, net income was $307 million, or $1.34 a share, compared with $617 million, or $2.63 a share, a year earlier. Adjusted earnings rose to $2.94 a share from $3.17. The latest quarter's results include a pretax goodwill impairment charge of $290 million, or $1.24 per share.

Revenue rose 2.5% to $49.96 billion.

Analysts polled by Thomson Reuters expected adjusted earnings of $3.05 a share on $51.21 billion.

Total operating expenses climbed 15% to $2.17 billion.

In June, the company said it plans to form a health-care information-technology joint venture that it expected to take public later in an initial public offering. The planned company will combine most of McKesson's technology segment with the bulk of Change Healthcare Holdings Inc., which is majority-wned by Blackstone Group LP. McKesson would own 70% of the new company, with the rest owned by Change Healthcare's shareholders, including Blackstone and Hellman & Friedman LLC.

Over the past year, the company has made job cuts and acquisitions as it contends with revamped customer relationships due to consolidation.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

October 27, 2016 18:05 ET (22:05 GMT)

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