McKesson posts Q1 revenue, profit increase

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Healthcare products and information systems developer McKesson reported a 5 percent increase in revenues and a 28 percent rise in earnings per diluted share for its fiscal 2008 first quarter (end-June 30, 2007). The firm said that its business segments, Distribution Solutions and Technology Solutions, both grew solidly.

Distribution Solutions revenues were up 4 percent for the quarter, according to the San Francisco-based company. U.S. Healthcare direct distribution revenues grew 6 percent for the quarter and warehouse sales increased 2 percent, McKesson said.

Canadian revenues increased 1 percent for the quarter, including a favorable currency impact of 2 percent, and medical-surgical distribution revenues were up 3 percent for the quarter. The company noted that its fiscal 2008 first quarter had one less week of sales compared with the same period last year.

Distribution Solutions gross profit of $822 million for the period was up 7 percent from $770 million in the first quarter a year ago.

In Technology Solutions, revenues were up 49 percent for the quarter, reflecting the impact of Per-Se revenues, growth in payor revenues, including recognition of $21 million of previously deferred revenue for a disease management contract, and continued growth in sales and implementations of software and imaging solutions for hospitals, clinics and physician offices. Services revenues were up 67 percent and software and software systems revenues were up 16 percent.

Technology Solutions operating profit in the quarter was $100 million, up 178 percent from $36 million a year ago, driven in part by the impact of the Per-Se acquisition and the $21 million of disease management revenues recognized under a contract, for which related expenses were previously recognized as incurred, McKesson noted.