Despite Q2 income dip, McKesson raises year-end outlook

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McKesson has reported decreased income, despite increased revenues for the 2010 fiscal second quarter, which ended Sept. 30.

The company posted revenues of $27.1 billion in 2010 second quarter, compared with $26.6 billion in the year-ago quarter.  “McKesson delivered solid results in the second quarter, with strong execution in both distribution solutions and technology solutions driving earnings,” said John H. Hammergren, its chairman and CEO.

In its technology solutions unit, revenues were up 4 percent for the quarter. Services revenues grew 5 percent reflecting the recognition of previously deferred revenues, according to the company. Software revenues were up 1 percent and hardware revenues were down 13 percent.

The company reported that its distribution solutions revenues were up 2 percent in the second quarter. Its U.S. pharmaceutical distribution revenues were also up 2 percent for the quarter.

However, McKesson reported that its net income dropped 8 percent to $301 million in the 2010 second quarter, compared with $329 million in the 2009 second quarter. The company’s income tax expenses rose 137 percent to $123 million from $52 million in the comparable year-ago quarter. McKesson noted that its income tax expense for the 2009 second quarter included $76 million in “credits related to the recognition of previously unrecognized tax benefits and related interest expense as a result of the effective settlement of uncertain tax positions.”

“We are raising our previous outlook and now expect that McKesson should earn between $4.45 and $4.60 per diluted share, excluding an adjustment to litigation reserves, for the fiscal year ending March 31, 2010,” Hammergren said.