McKesson HBOC is under fire again on financial restatements
McKesson HBOC is under fire again on financial restatements
By JIM STOMMEN
Healthcare InfoTech Executive Editor
The bad-news saga continues for McKesson HBOC (San Francisco), which this week again announced that it would revise its fiscal 1999 earnings downward. The action came less than a month after the company’s initial announcement on April 28 that it would be revising its 1999 results downward. McKesson said Tuesday that it may also have to restate prior results from prior years.
As it had last month, McKesson attributed the need for revisions to its ongoing audit of the company’s healthcare information technology business, formerly HBO & Co. (HBOC; Atlanta), which merged with McKesson in January in a blockbuster $12 billion deal.
With analysts and investors hammering at the company on both credibility and management issues, McKesson spokesman Larry Kurtz said, "I recognize that this is creating uncertainties for investors, but we thought it proper that we should disclosed this at this time." Kurtz noted that the company’s previous announcement had said there could be additional downward revisions, "and we now know that for a fact, so we thought it proper to disclose that."
The blame was placed on what McKesson termed "improper revenue recognition matters" involving HBOC software sales. Kurtz said the company is continuing to look at HBOC sales that were booked before they were completed. While McKesson expects most such contracts to be completed, the fact that they were subject to conditions such as approval by a customer’s board of directors, means the contracts could be cancelled.
Numerous class-action lawsuits have been filed on behalf of shareholders, and analysts have said that the company’s biggest ongoing problem is management credibility in the wake of the financial restatement problems. The future of McKesson Chairman Charles McCall who had held that same post at HBOC and CEO Mark Pulido is being questioned. Both analysts and investors have maintained that McKesson should have caught the HBOC accounting irregularities in the discovery process prior to the closing of the sale. McKesson’s stock price plunged again this week, dropping another 12% to about $33.50 after a 48% fall last month.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.