McKesson Corp. announced Friday that it is cutting its workforce and refining its strategy to lower costs.
The plan should save the drug distributor $170 million to $190 million before taxes in fiscal 2017, as well as incremental savings of $70 million to $90 million in 2018. In the last quarter, McKesson lost its contract with Optum, UnitedHealth Group's pharmacy benefit manager, and reported low revenue gains.
McKesson's moves will likely cost $300 million to $330 million, mostly for severance packages. The bulk of the costs will be recorded in the fourth quarter.
The company told Bloomberg that it will cut 1,600 jobs, or about 4% of its U.S. workforce. A McKesson spokeswoman didn't immediately respond to a request for comment from Modern Healthcare.
McKesson announced in February that it was acquiring Vantage Oncology, a national provider, and Biologics, an oncology specialty pharmacy, for a combined $1.2 billion. It also acquired Rexall, a Canadian pharmacy operator, for $2.2 billion in March.
McKesson's stock dropped to $151.94 a share after the markets opened Friday, but it has climbed since. It reached close to its lowest point in a year Thursday morning, dropping to $149.74 a share.