McKesson shopping around health IT unit worth up to $5B
McKesson Corp. is considering a sale or a merger for its information technology unit in an effort to contain costs and refocus on its drug distribution business, reported the Wall Street Journal.
The company’s Technology Solutions subsidiary has generated more revenue than any other U.S. health IT vendor in recent years, racking up $2.9 billion in sales in the last fiscal year (a 6 percent decline from 2015), with an operating profit of $519 million. WSJ estimated it could be worth up to $5 billion, including any debt.
That’s only a fraction of the $188 billion in sales McKesson’s drug distribution business brought in last year. The company’s chief financial offer, James Beer, had previously hinted to analysts it may look to narrow their focus, saying last year McKesson is “prepared to re-look at the portfolio on a continuing basis to figure out what fits and what doesn’t fit.”
The company announced in March it was cutting 1,600 jobs.
Whether the deal would be for the entire IT business isn’t clear, according to WSJ, with McKesson having made earlier moves to sell off parts of some of its technology assets. In April, it finalized a sale of its product suites for small physician practice electronic records and practice management, reportedly used by 35,000 physicians, to e-MDs.
A spokesperson for McKesson refused to comment on the reports it was looking to spin off the IT business, saying the company doesn’t offer statements on “rumors and speculation.”