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McKesson sees modest revenue gains but strong earnings

McKesson Corp. saw robust earnings in the last three months of 2015, thanks to lower foreign taxes and growth in its North American pharmaceutical distribution and services.

The San Francisco-based company reported $634 million in profit for the three months ended Dec. 31, the third quarter of its fiscal year. That was up 34% from the year-ago period. The figure includes $19 million related to tax law changes in foreign jurisdictions.

Overall revenue for the quarter was $47.9 billion, up 3% from the same period the year before. But McKesson's North American pharmaceutical distribution and services business was the only segment that showed revenue growth—It was up 6%.

Revenue from medical-surgical distribution was flat year-over-year, primarily because of the sale of Zee Medical, a workplace-safety supply business that McKesson sold to Cintas Corp.

McKesson's significantly smaller technology segment saw revenue of $694 million in the quarter, down 8%, primarily because it sold its nurse-triage business earlier in the fiscal year. Technology revenue was also dampened by what the company described as a previously anticipated year-over-year decline in its hospital software business.

Revenue for the first nine months of the fiscal year grew 8% to $144.2 billion, while income increased 36% to $1.8 billion. The results included a pretax gain of $52 million from the Zee Medical sale.


Adam Rubenfire

Adam Rubenfire covers supply chain for Modern Healthcare. His beat responsibilities include pharmaceuticals, medical devices, capital equipment, group purchasing organizations and medical supplies. His work has appeared in the Wall Street Journal, Automotive News and Crain’s Detroit Business. He has a bachelor’s degree in organizational studies from the University of Michigan. He joined Modern Healthcare in 2014.

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