McKesson's net income drops 52% in Q3

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McKesson has reported a double-digit drop in net income for the 2010 third quarter, which ended Dec. 31, 2010, compared with previous-year's third quarter, which was greatly affected by a litigation charge.

The company also posted a slight revenue decline in revenues in 2010 third quarter, compared with the 2009 third quarter: $28.24 billion versus $28.27 billion. Also, the net income dropped 52 percent to $155 million in the 2010 third quarter, mainly due to a $189 million pre-tax charge for litigation on wholesale prices.

Third-quarter Distribution Solutions revenues were flat, according to the company. U.S. pharmaceutical distribution revenues were down 1 percent, primarily due to reduced revenues associated with two warehouse customers and the prior year’s impact of the H1N1 flu virus, the company stated.

Canadian revenues, on a constant currency basis, grew 2 percent for the quarter, primarily due to market growth. Including a favorable currency impact of 4 percent, Canadian revenues grew 6 percent for the quarter.

Medical-surgical distribution revenues were down 2 percent for the quarter, the San Francisco-based company stated.

Distribution Solutions gross profit was $1.08 billion compared with $1.1 billion in the third quarter a year ago. Gross profit margin in the third quarter was lower compared with the third quarter a year ago, primarily due to the prior year’s impact of the H1N1 flu virus.

Gross profit margin continues to benefit from higher-margin products and services, including sales of OneStop Generics, which increased 29 percent in the third quarter.

On Dec. 30, 2010, McKesson completed the acquisition of US Oncology for $2.2 billion in the company's fiscal third quater. As of December 31, 2010, the balance sheet of US Oncology is included in McKesson’s balance sheet, according to McKesson. The operating results of US Oncology will be included in McKesson’s Distribution Solutions segment commencing in the fourth quarter of fiscal 2011.