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McKesson's Stock Tumbles On Generic Drug Pricing Weakness

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Generic Drug Price Deflation Is Weighing On McKesson Shares
Goldman Drops McKesson To Neutral, Sees Limited Upside

Generic drug pricing weakness has McKesson Corporation (NYSE: MCK) stock plummeting on Monday. Shares fell more than 11 percent after the company cut its FY 2016 earnings outlook.

The company's EPS range was lowered from $12.50-$13 to $12.60-$12.90, against the consensus analysts estimate of $12.83.

McKesson's revised outlook is reflected upon its operating profit from forecasted weakness in generic pharmaceutical pricing trends compared to previous expectations in the second half of the fiscal year.

While the company's latest guidance is disappointing, it still hasn't impacted any restructuring changes that it may have which may arise after the review.

John H. Hammergren, CEO and chairman said, "While we continue to drive growth across our broad and diverse businesses, we now expect the operating performance in our US Pharmaceutical distribution business in the second half of Fiscal 2016 will be below our previous expectations."

"Despite our revised assumptions related to generic pharmaceutical pricing trends and the impact of recent customer consolidation, our company is performing well, both domestically and internationally," Hammergren stated.

Shares traded recently at $163.50, down 10.3 percent.

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