McKesson says 2017 profit to be hurt by weak generic drug pricing
Tuesday, January 12, 2016
Drug distributor McKesson Corp (MCK.N) said its fiscal 2017 earnings are likely to be hit by weak generic drug pricing and narrowed its profit forecast for 2016.
McKesson's shares fell about 10 percent to $164.23.
The company, which distributes drugs to retailers such as Rite Aid Corp (RAD.N) and CVS Health Corp (CVS.N), said it expects an impact of about 85 cents on adjusted earnings per share in the year beginning April.
The company said it expects earnings per share to rise 3-8 percent, also citing an impact from the expiration of its contract with pharmacy benefit manager Optum.
The forecast implies a mid-point of about $13.40 per share, which fell short of Wall Street estimates, analysts from Evercore ISI and Baird Equity Research said.
Pricing for branded pharmaceuticals will be below 2016 levels, the company warned.
The company forecast 2016 adjusted earnings of $12.60 to $12.90 per share, compared with its previous forecast of $12.50 to $13.00 per share.
The 2017 outlook comes four months ahead of schedule and missed market estimate by 7 percent. Market headwinds appear to be of greater magnitude than previously anticipated, Baird analysts wrote in a note.
reuters.com
