McKesson has reported a 4 percent dip in net income, despite a 9 percent increase in revenues for the fiscal first quarter of 2011, compared with the year-prior results.
Specifically, the company reported that revenues for the first quarter, which ended June 30, were up 9 percent to $30 billion, compared with $27.5 billion a year ago. The net income was $286 million in this year’s fiscal first quarter, compared with $298 million in last year’s fiscal first quarter.
During the quarter, the San Francisco-based company entered into an accelerated share buyback agreement to repurchase $650 million of common stock, leaving $850 million on its current share repurchases authorization. The company also paid $47 million in dividends and made a $105 million acquisition during the first quarter from its purchase of US Oncology.
Also accounting for the disparity of income versus revenues is a 13 percent increase in the operating expenses in the year-over-year first fiscal quarter ($1.04 billion vs. $918 million).
Revenues of the distribution solutions unit were up 9 percent in the first quarter, driven mainly by strong growth in U.S. pharmaceutical direct distribution and services revenues, reflecting market growth and the business mix, as well as the acquisition of US Oncology. In the first quarter, distribution solutions’ gross profit improved due to the positive impact of the acquisition of US Oncology, according to McKesson. In last year’s first quarter, gross profit was positively impacted by receipt of the proceeds from a $51 million anti-trust settlement.
In the technology solutions unit, the company booked revenues that were up 6 percent for the first fiscal quarter over the previous year’s first quarter. The operating profit, based on generally accepted accounting principles (GAAP), in the first quarter was $100 million and the GAAP operating margin was 12.47 percent. The technology solutions performance was aided by stronger-than-expected progress in achieving certain customer implementation milestones, as well as the timing of payments from customers.
“I am pleased with McKesson’s strong first quarter financial results, which provide a solid foundation for the remainder of our fiscal year,” said John H. Hammergren, chair and CEO.