Strong performance in McKesson Corp.'s North American pharmaceuticals business drove rising revenue for the San Francisco-based company in the fourth quarter of its fiscal year.
Revenue for the three months ended March 31 increased 19% to $45 billion, compared to $37.8 million from the same quarter last year. Segment revenues were up across the board, including 18% growth from the company's North America pharmaceutical distribution and services, which McKesson attributed to market growth and growth from existing customers.
The company's technology segment was down 10% in the fourth quarter, impacted by what McKesson says was an anticipated year-over-year decline in its hospital software business, the planned elimination of a product line and the previously announced phaseout of its international technology business. The decline was partially offset by growth in other technology businesses, the company said.
McKesson CEO John Hammergren said in a news release that the company continues to “optimize” its portfolio in the technology segment.
Full-year profit for the entire company was $1.4 million, up 17% from the year before. Revenue increased 30% to $179 billion, up 30%.
McKesson expects earnings in the coming year to be driven by high single-digit revenue growth in its North American pharmaceutical business and less significant growth from its medical-surgical supply business. The technology business is expected to continue to drop again because of the decline in the hospital software business decline and the pending sale of a business line during the fiscal year.
The company's fourth-quarter net income was heavily offset by a $267 million loss related to the planned sale of McKesson's Brazillian pharmaceutical business. The company's filings note that this figure includes $241 million in pretax “non-cash impairment charges to write off the business' long-lived assets and reduce the carrying value of this business to its fair value, less costs to sell."
As a result, McKesson's profit was $132 million for the three months ended March 31, down 64% from $370 million during the same period the year before. A dispute with the Canada Revenue Agency, the country's taxation service, led to $150 million in claim and litigation charges in the third quarter, which also may have put a dent in McKesson's income.