McKesson sees slight increases in Q2
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The company recorded revenues for the 2010 second quarter of $27.5 billion, a 1 percent increase compared with $27.1 billion in the previous year’s second quarter. Similarly, net income rose 9 percent to $327 million in the second quarter of 2010 over the year-ago quarter.
On Oct. 19, McKesson announced an agreement to settle an action filed by the state of Connecticut relating to First DataBank’s published drug reimbursement benchmarks, commonly referred to as average wholesale prices for $26 million. As a result, second-quarter earnings per diluted share included a pre-tax litigation charge of $24 million. Last year’s second quarter results included a pre-tax credit of $20 million.
According to McKesson, the 2010 second quarter results also included a non-cash, pre-tax asset impairment charge of $72 million in its technology solutions unit, related to the revenue cycle management solution, Horizon Enterprise Revenue Management.
In the technology solutions unit, overall revenues were down 3 percent for the second quarter, which the company said primarily reflects the sale of McKesson Asia Pacific, which accounted for quarterly revenues of approximately $17 million in last year’s second quarter. Also, in the second quarter of the prior year, McKesson noted that results included the recognition of $22 million of previously deferred revenues, resulting in $16 million of related gross profit.
“While we are disappointed in the asset impairment charge associated with Horizon Enterprise Revenue Management, we believe very strongly that over time hospitals will need the enhanced functionality of this product in a post-healthcare reform environment,” said John H. Hammergren, McKesson’s chairman and CEO.
Overall revenues in the distribution solutions unit were up 2 percent in the second quarter, compared with the 2009 second quarter, McKesson stated. In addition, U.S. pharmaceutical distribution revenues were up 1 percent for the quarter.