(Adds details, shares)
May 18 Drug wholesaler McKesson Corp
reported a higher-than-expected quarterly profit, helped by
strength in its pharmaceutical distribution and services
The company's shares were up 6.2 percent at $150.30 in
after-market trading on Thursday.
For its fiscal year 2018, McKesson forecast branded drug
percentage price increase to be in the mid-single digits and
nominal contribution from generic medicines that are expected to
see a price rise.
The company said it expects fiscal 2018 adjusted earnings of
$11.75-$12.45 per share.
The results come at a time when the pharmaceutical supply
chain, including pharmacy benefit managers and drug
distributors, is coping with the fallout of increased scrutiny
of soaring drug prices by regulators and politicians.
The scrutiny has led to a drop in the prices of generics and
a slowdown in the pace of increase in branded drug prices.
"Our fiscal 2017 was impacted by both company-specific and
industry pressures," McKesson CEO John Hammergren said in a
The company said on Thursday it expected Rite Aid Corp
to contribute about $13 billion in its fiscal 2018
Rite Aid, McKesson's customer for more than 15 years, signed
an expanded five-year contract in 2014, through which McKesson
added generic drugs to its distribution.
However, Walgreens Boot Alliance deal for Rite Aid
in 2015 cast doubts over that contract.
Net income attributable to McKesson rose to $3.59 billion,
or $16.76 per share, in the fourth quarter ended March 31, from
$431 million, or $1.88 per share, a year earlier.
The latest quarter earnings included a pre-tax net gain of
$3.9 billion related to the creation of the Change Healthcare
joint venture, the company said.
Excluding items, the company earned $3.42 per share, ahead
of analysts' average estimate of $3.00, according to Thomson
Revenue rose 4.4 percent to $48.71 billion, but missed
analysts' average estimate of $49.48 billon.
(Reporting by Ankur Banerjee in Bengaluru; Editing by Sriraj