US drug distributor McKesson Corp.'s (MCK) third-quarter profit declined from a year ago despite a small growth in revenues, as higher operating costs hurt the bottom line. Earnings for the period fell short of expectations, while revenues surpassed estimates.
Moving ahead, the San Francisco, California-based company lowered its full-year 2013 earnings guidance.
McKesson's third-quarter profit declined to $298 million or $1.24 per share from $300 million or $1.20 per share last year. On a per share basis, earnings improved reflecting lower number of shares outstanding for the latest third quarter.
Adjusted net income quarter declined to $340 million or $1.41 per share from $351 million or $1.40 per share last year. Analysts polled by Thomson Reuters expected earnings of $1.63 per share. Analysts' estimates typically exclude special items.
Revenues for the third quarter grew 1 percent to $31.19 billion from $30.84 billion a year ago. Twelve analysts had consensus revenue estimate of $30.81 billion for the quarter.
Distribution solutions unit, which generates bulk of the revenues, rose 1 percent in the quarter, driven mainly by growth at US pharmaceutical direct distribution and services business and growth in Medical-Surgical distribution business. Technology solutions revenues were flat.
Total operating costs rose 10 percent to $1.18 billion. Looking forward to the full year 2013, the company now expects adjusted earnings of $7.10 to $7.30 per share, down from prior estimate of $7.15 to $7.35 per share. Analysts currently anticipate earnings of $7.30 per share.
Chief Executive John Hammergren said the company's now expects its distribution solutions segment to perform "better than its original expectations", while outlook for technology solution remains unchanged.
Nevertheless, Hammergren said the company had to lower its full year outlook due to a charge in the Canadian business and revenue deferral in international technology business.
The company's board also authorized an additional $500 million to the share repurchase program.
MCK closed Thursday's trading at $105.23, down 0.40%, on the NYSE. In after hours the stock further slipped $0.60 or 0.57%.
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