Last week, McKesson released its earnings for the third calendar quarter of 2019. (See the links below.) The company revealed unexpectedly high revenue growth in its distribution business—but little incremental profit from these new revenues. Its stock dropped sharply on the news..
The thief that burgled the missing profits: CVS Health, McKesson’s largest customer. McKesson’s financial results reflected the challenges of an ultra-low profit customer that unexpectedly started growing much faster than the overall industry.
Consolidation and concentration in the pharmacy and pharmacy benefit management (PBM) industries continue to pressure wholesalers’ profits. Manufacturers and smaller customers should get ready for the fryer. Robble robble!
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