McKesson Narrows FY16 Adj. EPS View; Stock Plunges

(RTTNews) - McKesson Corp. (MCK) announced an update to its outlook for adjusted earnings per share for the fiscal year ending March 31, 2016 to a new range of $12.60 to $12.90 from the previous range of $12.50 to $13.00. Analysts polled by Thomson Reuters expect the company to report earnings of $12.83 per share for fiscal year 2016. Analysts' estimates typically exclude special items.

In the pre-market trade, MCK is currently trading at $169.95, down $12.44 or 6.82%.

The updated outlook for Fiscal 2016 reflects McKesson's expectation that operating profit derived as a result of generic pharmaceutical pricing trends will be weaker in the second half of the fiscal year compared to previous expectations.

The updated Fiscal 2016 guidance range of $12.60 to $12.90 Adjusted Earnings per diluted share does not include the impact of any potential restructuring charges that may result from this review.

"While we continue to drive growth across our broad and diverse businesses, we now expect the operating performance in our U.S. Pharmaceutical distribution business in the second half of Fiscal 2016 will be below our previous expectations," said John H. Hammergren, chairman and chief executive officer.

McKesson expects weaker generic pharmaceutical pricing trends, specific to the company's mix of business, and recent customer consolidation to impact the company's outlook for Fiscal 2017. McKesson is in the early phase of its budget development process and has a preliminary target of 7% to 12% growth in Adjusted Earnings per diluted share for Fiscal 2017.

The preliminary Fiscal 2017 outlook assumes 7% to 12% growth when compared to the Fiscal 2016 outlook of $12.60 to $12.90 in Adjusted Earnings per diluted share, less 48 cents per diluted share related to gains on business dispositions and favorable discrete tax items in Fiscal 2016. Analysts expect the company to report earnings of $14.44 per share for fiscal year 2017.

The company announced preliminary fiscal 2017 adjusted earnings per share growth of 3% to 8%, which includes 3% to 4% growth from capital deployment.