McKessonHBOC reports flat income, no new deals
A Healthcare InfoTech Staff Report
So far this year, there has been little news from HBOC (Atlanta) now McKessonHBOC. After completing several acquisitions at whirlwind pace to conclude 1998, climaxing with the announcement of the merger with pharmaceutical and medical supplier McKesson, the giant healthcare IT supplier has been quiet.
Many attending Hambrecht & Quist’s (San Francisco) 1999 Healthcare Conference at the beginning of the month probably expected some new bombshell announcement. But McKesson President Mark Pulido did little more than acknowledge that the acquisition and merger with HBOC had been completed, tacking on a review of the company’s products and services. Since then, the company has done little more than issue standard press releases concerning earnings, new board policies and product adoptions.
McKessonHBOC’s earnings report was undoubtedly the biggest news, the company reporting a surge in revenue but flat earnings growth because of a charge of $17.2 million related to the acquisitions of RedLine HealthCare and Keystone Bottling. Without the charge, revenue would have been $59,4 million. With it, the revenue was $42.2 million, a meager increase over the year-ago quarter revenue figure of $42 million. While this report was in line with analysts’ predictions, and the company said it remained on target to reach its goal of $3 in earnings per share in fiscal 2000, shareholders apparently expected more; on Tuesday the company's share price dropped 10% to $72.
Shareholder concern was apparently focused on the HBOC side, with reported software sales of $150 million. Some had predicted sales in this sector of $165 million to $180 million. Nevertheless, the HBO unit performance appeared strong, profit rose 36% for the third quarter to $142 million, excluding charges. Revenue rose 19% to $469 million, the increases coming mostly from service (55%), software (32%) and then hardware (13%).
To reach its year 2000 goal, Pulido said in a statement that the company is projecting internal growth of 20% annually "in both our healthcare supply management and information technology businesses."
In another statement issued Wednesday, the company said that its board of directors had established a new annual dividend policy of 24 cents per share on the company's common stock. The board then declared a regular quarterly dividend of six cents per share, to be paid April 1 to stockholders of record on March 1. Charles McCall, McKessonHBOC chairman, said that the payout rate "compares favorably to other large, rapidly growing companies. Most importantly, it will enable MckessonHBOC to re-invest incremental cash from earnings in product development and other growth opportunities. Given our demonstrated high returns on invested capital, we expect that this will deliver enhanced long-term value to stockholders."
The company also reported that Serv All/SHA (Colum bus, OH), a large independent retail pharmacy network with more than 2,700 members, has adopted HBOC’s OmniLink product, a centralized pharmacy computer application. OmniLink will be used to perform pre- and post-edits for on-line confirmation of daily price updates and managed care requirements.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content