McKesson Corp. is firing 1,600 people, or about 4 percent of its U.S. workforce, to cut costs after the drug distributor lost some key customers.
The company began a strategic review in January and determined that “reductions to our workforce would be necessary to align our cost structure with our business needs,” according to an e-mailed statement. San Francisco-based McKesson began telling workers about the firings in mid-March, the statement said.
McKesson’s business has been hurt by the expiration of a contract with Optum, a unit of UnitedHealth Group Inc., and changes in contracts with Omnicare Inc., a provider of pharmaceuticals to nursing homes and assisted living facilities, and Target Corp. A slowdown in price increases on generic drugs also hurt operating profit in the second half of the current fiscal year, McKesson said in January.
The company has been making acquisitions to boost growth. McKesson purchased Rexall Health, Canada’s No. 2 drugstore chain, for $2.23 billion in early March, and bought two oncology companies in February for $1.2 billion.
McKesson shares fell less than 1 percent to $156 on Wednesday in New York trading. The shares have lost 32 percent in the past 12 months.