UPDATE 2-McKesson 4th-qtr profit rises, forecast in line

Mon Apr 30, 2012 6:25pm EDT

* Fiscal Q4 EPS $2.09 vs Street view $2.06

* Revenue up 10 pct to $31.7 billion

* Sees fiscal 2013 EPS $7.05 to $7.35

By Bill Berkrot

April 30 (Reuters) - Pharmaceutical wholesaler McKesson Corp on Monday reported a higher quarterly profit on a 10 percent rise in sales from its core drugs distribution business, and it issued an earnings forecast for fiscal 2013 in line with Wall Street estimates.

McKesson forecast adjusted earnings for fiscal 2013 of $7.05 to $7.35 per share. Wall Street on average is estimating $7.19 per share.

JP Morgan analyst Lisa Gill said in a research note that the forecast range implies 10.5 percent to 15 percent growth, "which bodes well for fiscal 2013 given McKesson's history of exceeding initial expectations."

She noted that for at least the last five fiscal years the company's earnings have come in about 8 percent higher than the mid-point of the original forecast range.

The forecast includes the anticipated contribution from the acquisition of Canada's Katz Group, which was completed in the fourth quarter, and business from the U.S. Department of Veteran Affairs, which earlier this month again selected McKesson to be its primary pharmaceutical supplier.

The company said it expects to benefit from strong growth in the contribution from oral generic pharmaceuticals in fiscal 2013.

The recent introduction of generic versions of huge-selling drugs such as the cholesterol fighter Lipitor and schizophrenia treatment Zyprexa and others are expected to significantly boost sales of cheaper generic drugs, which carry a higher profit margin than expensive branded medicines.

McKesson does not give quarterly earnings forecasts but cautioned that growth would be weighted to the second half of the year. "The fourth quarter will be exceptionally strong," Chief Financial Officer Jeffrey Campbell told analysts on a conference call.

McKesson posted a net profit of $521 million, or $2.09 per share, for its fiscal fourth quarter ended March 31, compared with a profit of $422 million, or $1.62 per share, a year ago. That topped analysts' average expectations by 3 cents, according to Thomson Reuters I/B/E/S.

Revenue for the quarter rose 10 percent to $31.7 billion, exceeding Wall Street estimates of $30.4 billion.

The drug distribution business saw sales rise to $30.8 billion, while technology solutions sales slipped 2 percent to $860 million.

The company also said its board had authorized repurchase of up to an additional $700 million of common stock.