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May 18 (Reuters) - Drug wholesaler McKesson Corp reported a higher-than-expected quarterly profit, helped by strength in its pharmaceutical distribution and services business.
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 statement.
The company said on Thursday it expected Rite Aid Corp to contribute about $13 billion in its fiscal 2018 revenue.
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 Reuters I/B/E/S.
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 Kalluvila)