McKesson Corp. reported GAAP net income attributable to the company of $633 million, or $2.86 per share, for the fiscal third quarter of 2017, versus $634 million, or $2.71 per share, in the year-ago period.
Non-GAAP net income from continuing operations, net of tax, attributable to the company was $674 million, or $3.03 per share, compared with $739 million, or $3.18 per share, in the fiscal third quarter of 2016.
The S&P Capital IQ consensus normalized EPS estimate for the quarter was $2.91.
Results for the quarter included pretax charges totaling $4 million, or about 2 cents per share, related to the company's cost alignment plan disclosed in March 2016. The results primarily benefited from a lower tax rate, partially offset by a softer pricing environment in the U.S. pharmaceutical business within distribution solutions compared to the prior year.
McKesson's GAAP total revenues were $50.13 billion, up from $47.90 billion, a year ago. GAAP revenues for total distribution solutions were $49.44 billion, up from $47.21 billion, for the year-ago quarter. The company's GAAP revenues for technology solutions were $694 million, remaining flat from the prior-year period.
On a GAAP basis, the distribution solutions operating profit decreased year over year to $813 million from $906 million, while technology solutions operating profit rose to $132 million from $122 million in the fiscal third quarter of 2016.
McKesson expects GAAP EPS of $9.80 to $10.30 for the fiscal year ending March 31, 2017.
Adjusted EPS excludes amortization of acquisition-related intangible assets of $1.30 to $1.45 per share; acquisition expenses and related adjustments of 65 cents to 75 cents per share; LIFO inventory-related credits of 60 cents to 70 cents per share; and claim and litigation reserve credits of 1 cent per share for average wholesale price litigation matters.
Excluding the second-quarter enterprise information solutions goodwill impairment charge and an anticipated 2 to 4 cents in expected cost alignment plan charges from adjusted earnings, McKesson expects $12.60 to $12.90 per share for the fiscal year ending March 31, 2017.
The S&P Capital IQ consensus normalized EPS estimate for fiscal 2017 is $12.58.
In addition, McKesson entered into an agreement on Jan. 24 to acquire CoverMyMeds for about $1.1 billion, or $900 million net of incremental cash tax benefits. The agreement also includes a maximum $300 million of consideration contingent upon CoverMyMeds' financial performance through the fiscal year ending 2019.
CoverMyMeds is a privately-owned company headquartered in Columbus, Ohio, that provides electronic prior authorization solutions to pharmacies, providers, payers and pharmaceutical manufacturers.
The transaction is subject to customary closing conditions, including regulatory review, and is expected to close in the first half of fiscal 2018.