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McKesson To Review Cost Structure; To Buy Medical Specialties Distributors

McKesson Corp. (MCK) announced a multi-year strategic growth initiative which comprises multiple growth pillars, and includes a comprehensive review of the company's operations and cost structure, designed to increase efficiency. As a preliminary phase of implementing the strategic growth initiative, McKesson will incur restructuring and other charges in Fiscal 2019, which will impact the company's results on the basis of U.S. generally accepted accounting principles. The restructuring plan consists of after-tax GAAP charges that are estimated to be approximately $150 million to $210 million.

McKesson also announced that it has signed a definitive agreement to acquire Medical Specialties Distributors, a national distributor of infusion and medical-surgical supplies as well as biomedical services to alternate site and home health providers. The transaction is valued at $800 million, and is expected to close in the first half of fiscal 2019. McKesson expects the transaction will be modestly accretive to adjusted earnings per diluted share in fiscal 2019.

The company has reaffirmed its adjusted earnings outlook of $12.50 to $12.80 per diluted share for the fiscal year ended March 31, 2018. In the fourth quarter, the company preliminarily estimates recording GAAP after-tax net charges of approximately $0.6 billion to $1.9 billion.

For fiscal 2019, McKesson announced a preliminary target for adjusted earnings of $13.00 to $13.80 per diluted share.

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