Well let's see what comes out of the earnings releases and subsequent earnings calls by Cardinal Health on Oct 31, 2016 at 9:30AM EDT and by AmerisourceBergen on Nov 2, 2016 at 9:30AM EDT. Please pay particular attention to Cardinal Health's earnings report because their management team has been executing with a high degree of effectiveness.
13 replies (most recent on top)
And many got laid off and are making $O/hour because they 'just don't have the funds'.
Obviously, if you compare the total compensation, you will see Cardinal Health CEO, George S Barrett , earns $6.69 mil compared to John Hammergren who earned $131.19 mil.
Oh, and Amerisource Bergen's CEO, Steven H Collis, earns $8.86 mil.
SEE THE DIFFERENCE PEOPLE??
The average McKesson warehouse worker probably earns $15 an hour
MCK got its volume/price mix wrong. Here is a bit of insight. Every National Drug Code (NDC) or just Drug has its own market. Some Drugs are in high demand or have very few substitutes if any and drug manufacturers can charge more for those drugs. The opposite holds true.
WhoooooAAAAAHHH! Cardinal Health Management has got its act together. They still found a way to grow revenues a DOUBLE DIGIT. The revised their guidance down by about a $Quarter. MCK revised theirs by more than a dollar. See the Cardinal Health numbers below. Now onto November 2 for ABC earnings. Stay tuned!
Earnings: Cardinal Health’s adjusted earnings fell 10% on a year-over-year basis to $1.24 per share. It however managed to outpace the Zacks Consensus Estimate of $1.21.
Revenues: Revenues increased 14% on a year-over-year basis to $32.0 billion. It also managed to beat the Zacks Consensus Estimate of $31.2 billion.
Key Stats: Pharmaceutical revenues surged 14% to $28.8 billion while revenues from Medical segment increased 12% to $3.3 billion in the quarter.
Earnings guidance revision: The company now expects generic drug prices to fall in the mid-to-high single digits while selecting branded drugs to increase 7% to 9% in the year. It now forecasts annual earnings adjusted earnings per share of between $5.40 to $5.60, down from $5.48 to $5.73 previously.
Can't wait to see how well Cardinal Health did this past quarter.
MCK stock will tank further if CAH and ABC earnings report contradict even slightly MCK management thesis. Buckle up folks! Much to your dismay, you could be in for another "wild" roller coaster ride.
And yet they claim to not want to hire anyone without a strategy background (i.e. McKinsey) who brings 1998 templates to the table. Yet, Mckesson pays tens of thousands to these clowns because they can't think for themselves and lay off good people with better ideas. Getting them nowhere. Well, not nowhere, but here. Losing ALL their shareholders and employees wealth. Top company to work for Hammergren per your Q&A? (Laugh) I don't think so. You took away free tea and coffee from our kitchens. That's pretty desperate.
That's exactly right. And McKesson was not prepared, sleeping at the wheel, expecting their billions to continue to flow in. Shocking how such a big company can be so off on strategy.
¡One Post Has Fallen¿ I am loving this thread. I happen to be a part time day trader so let me chip in the discussion. David Larsen, a LEERINK research analyst that covers McKesson said this much after McKesson reported its quarterly earnings: "Leerink expects price competition is due to joint venture agreements that WBA/ABC and CVS/CAH have created. Slowdown in generic inflation is forcing distributors to be more aggressive in competiting for business. LEERINK sees issues as “new normal" and drugmakers will be reluctant to raise prices aggressively for at least the next 6+ months.
Worked in 1 of the 3 companies mentioned in the post. Great call by the way cause at the end of the day, existing employees need to figure out where MCK is headed so they can react accordingly.
MCK's CEO was racking in $120mm a year and justified the payout because it was an IT company rather than a traditional drug middleman. Now he is saying that the company can't grow organically because the drug makers can't mark up their price fast enough.
Of the 3 mentioned, MCK does the least amount of business in drugs, so why is it that its stock got slammed the most?
Maybe because the other two have majority of their business with large retailers and PBMs when prices are set in advance and have less wiggle room where as MCK has a big chunk of its business with Fed/Local government agencies/departments where traditionally there is less accountability on how much the drugs are being charged to the customers?
It sure looks like something awful is happening at MCK. Check this out: JH_CEO sold 201,000 shares of MCK at about $180 per share during the month of September 2016 alone (see http://www.nasdaq.com/quotes/insiders/hammergren-john-h-393706 ) . Mind you, that was the last month of the latest financial reporting quarter. Did he know an ugly quarter was on the horizon? If so, how did he find out and was it in keep with securities laws?
I will second the previous commenter and give much deserved kudos to Johnny Hammer. A reviews of the finest investing news papers seem to indicate MCK may be trying deflect the public's attention from its own bone headed moves.
From Investor's Business Daily:
[A note from Citi Research analyst Garen Sarafian said McKesson was blaming AmerisourceBergen for much of its troubles, saying AmerisourceBergen had made a move to shore up more business from independent pharmacies.
"While we have no reason to refute (McKesson) management we respect, we find it extremely odd that peer raised through the ranks of the company's conservative culture for nearly a quarter-century would choose to compete so aggressively as to create such a large impact on (McKesson)," Sarafian wrote.]
For the full story, step over to this side of the Internet: http://www.investors.com/news/mckesson-drags-down-sector-with-earnings-miss-lower-outlook/
Great call Johnny Hammer! It looks like you may be onto something. If either Cardinal Health or AmerisourceBergen or both come up with an earnings beat, one could confidently speculate that McKesson's strategy is sputtering big time and no amount of cost cutting will get MCK out of the gutter it painstakingly has dug itself into.
It may seem like an odd argument for anyone following the biggest stories in the healthcare industry this year, but McKesson Corporation said that fewer price increases on drugs -- and smaller rates of increases when they do occur -- forced the company to miss expectations for its fiscal 2017 second quarter. McKesson Corporation saw quarterly revenue grow 2% compared to the year-ago period, although EPS fell 49% in the same comparison.
To the initiated, this argument may seem to make sense. Indeed, each of the three companies generates revenue from stocking branded pharmaceuticals in inventory and distributing them throughout the market. Prices are negotiated under contracts and revenue is derived from capturing a percentage of the value, logistical and otherwise, that the drug wholesalers deliver for drug manufacturers and brand owners. Falling drug prices, or, more accurately, drug price hikes occurring at a slower pace than management at McKesson Corporation originally envisioned when determining full-year financial guidance months ago, will indeed need to be rectified by lower guidance and analyst expectations. And that's exactly what happened.
The worry is that AmerisourceBergen and Cardinal Health will have similar news when they announce earnings next week, since they operate in the same ecosystem and with nearly identical business models. However, while a significant part of each company's business, sourcing and distributing drugs is only part of operations. The companies also distribute medical supplies and devices, source consumer products including cosmetics, and offer data solution services, among other practices. Cardinal Health even offers its own brand of medical and surgical products. Are unexpected results in store next week?
The 15 analysts covering Cardinal Health's quarterly earnings expect generally good numbers on Monday, according to numbers compiled by Yahoo! Finance. The average revenue estimate is just over $31 billion, which would represent growth of 10.7% from the year-ago period. However, analysts are expecting a drop in adjusted EPS from $1.38 in the year-ago period to $1.21 in the most recent quarter, although estimates call for earnings growth to resume in the next quarter. It's also worth pointing out that Cardinal Health has beat the Street's EPS estimates in each of the last four quarters.
The 14 analysts covering AmerisourceBergen's quarterly earnings expect good numbers as well, also according to numbers compiled by Yahoo! Finance. The average revenue estimate is $37.8 billion and the average EPS estimate is $1.23, representing growth of 6.7% and 5%, respectively, from the year-ago period. The company has beat the Street in each of the last three quarters, and missed by one penny in the fiscal 2015 fourth quarter.