McKesson stock surged to a new high Thursday, after the drug distribution giant boosted its full-year profit outlook late Wednesday, aided by its role in Covid vaccine distribution. McKesson (MCK) also reported fiscal third-quarter results that beat estimates. Drug distribution peer Cardinal Health (CAH) reported a sales and earnings beat Thursday morning.
McKesson stock rose solidly Thursday, hitting a new high. The company reported after rival AmerisourceBergen (ABC) earlier in the day issued fiscal first-quarter earnings that matched estimates, with sales that just beat expectations. In addition, AmerisourceBergen boosted its full-year profit forecast as well — also a reflection of the distribution of Covid vaccines and therapeutics.
AmerisourceBergen stock climbed slightly Thursday, also setting an all-time peak.
AmerisourceBergen and McKesson have staged powerful run-ups as they work to focus on their expansion plans and move past allegations from state and local governments that they played roles in worsening the nation’s opioid epidemic. The two companies — along with Johnson & Johnson (JNJ) and Cardinal Health — in July proposed a $26 billion settlement to resolve scores of lawsuits related to their alleged role in the crisis.
McKesson stock is sitting atop a strong four-month rally. AmerisourceBergen has climbed 19% since the end of November, vs. a 0.5% drop for the S&P 500.
Cardinal Health reported Thursday its fiscal second-quarter earnings came in at $1.27, down 27% from a year earlier, but 4 cents above the consensus target. Revenue rose 9%, to $45.46 billion, above analysts’ $45.32 target. Cardinal Health shares edged down Thursday.
McKesson Stock, Earnings
McKesson reported revenue of $68.6 billion, up 10% and above estimates for $66.6 billion. The company earned $6.15 per share, a 34% gain. That was above forecasts for $5.43.
McKesson raised its fiscal 2022 adjusted earnings per share outlook to a range of $23.55 to $23.95, up from an earlier outlook of $22.35 to $22.95. The prior outlook had help from its role in distributing Covid vaccines. McKesson has played a big role in the U.S.’ vaccine rollout, and has helped with international distribution.
McKesson stock climbed 3.5% to 267.42. Shares are extended from a January rebound from its 10-week moving average, and in a profit-taking zone, up more than 20% from a November breakout.
Shares have a 97 Composite Rating. Their EPS Rating is 90.
McKesson in January declared a quarterly dividend of 47 cents per share. In December, it also announced a $4 billion increase to its stock buyback program.
McKesson in recent years has been trying to become more streamlined. It has split off its interest in Change Healthcare, a health care technology company, and has been pulling out of markets in Europe. McKesson has also been trying to expand its oncology business, while strengthening its biopharma services division.
Elsewhere, Cardinal Health reported mixed results early Thursday. It finished the day down 0.3%. Cardinal Health stock has, in recent months, been trying to recover from a big hit it took in August after reporting earnings.
AmerisourceBergen Stock, Earnings
AmerisourceBergen earnings rose 18% to $2.58 a share for its first quarter. That was in line with estimates.
Revenue rose 13% to $59.63 billion. That figure was above estimates for $59.6 billion.
The company raised its adjusted earnings-per-share forecast to $10.60-$10.90, up from $10.50 to $10.80. The company has helped with distribution of coronavirus antibody and antiviral treatments, and its global network of businesses is supporting vaccine distribution outside the U.S.
Drug distributors are the institutional middlemen between drugmakers and pharmacies, hospitals and other medical facilities. They wield a heavy influence on drug pricing and availability throughout the U.S. AmerisourceBergen, McKesson and Cardinal Health dominate that distribution segment of the U.S. drug market.
“The U.S. prescription market continues to grow and has shown tremendous resiliency,” AmerisourceBergen CEO Steven Collis said at a conference last month. He added that “in pharmaceuticals, inflation at the net level has been very constant.”
AmerisourceBergen in June bought the majority of Walgreens Boots Alliance‘s (WBA) Alliance Healthcare segment for $6.275 billion in cash and stock — a move that widens its distribution network in Europe.
The three distribution giants in July reportedly negotiated a proposed settlement agreement that would allow around $21 billion over 18 years to be dispersed to communities to fund treatment and other services. Johnson & Johnson said it would pay up to $5 billion over nine years.
The settlement would also set up a clearing house that brings together data from the three distributors. The distributors have been accused of doing too little to stop the flow of opioids into the illicit market, while Johnson & Johnson was accused of misleading marketing, according to Reuters.
The actual amount of the payout depends on how many states agree to the proposal. Most states have so far joined the settlement.
The companies have disputed allegations of playing a part in the opioid epidemic. Thousands of lawsuits, at the state and local levels, have been filed against the drug companies and others.
McKesson stock has a 12-month gain of 48%. AmerisourceBergen has climbed 30%.
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