McKesson (MCK) & Genpact Extend Tie Up to Improve Workflow
McKesson Corporation MCK recently extended its relationship with Genpact Limited G. The extension is aimed at bringing continued efficiency and automation capabilities to McKesson’s finance operations, utilizing automation and AI solutions.
The latest development is expected to significantly solidify McKesson’s foothold in the digital finance operating model optimization space on a global scale.
Rationale Behind the Extension
The extension builds on a long-standing association of simplifying and standardizing McKesson’s finance processes, leveraging its operational excellence and enterprise strategy roadmap, combined with Genpact’s process expertise. The companies have delivered digitally-enabled automation and other advanced technologies to drive greater effectiveness and efficiencies in McKesson’s finance processes.
With the latest extension, the partnership is expected to focus on advancing the operating model, scaling operating capabilities with digital initiatives and evolving customer-centric models.
Per McKesson’s management, the partnership with Genpact, in combination with other finance operating initiatives, will likely accelerate its multi-year strategic growth initiative and contribute to a significant reduction in the cost of finance operations. It is also expected to better position McKesson to meet the needs of the healthcare industry.
Genpact’s management believes that rapid changes and disruption have highlighted ongoing cost pressures, data management challenges and the need for agility. This has necessitated McKesson to continue to adapt its operating models.
Industry Prospects
Per a report by Precedence Research, the global digital health market was estimated to be $262.63 billion in 2022 and is anticipated to reach $939.54 billion by 2032 at a CAGR of 13.1%. Factors like the increasing penetration of smartphones, the rising availability of smartphone applications related to health and fitness and the growing adoption of telehealth are expected to drive the market.
Given the market potential, the recent extension of the tie-up is expected to boost McKesson’s position in the niche space.
Recent Developments
This month, McKesson announced that its independent specialty pharmacy specializing in oncology and rare disease areas, Biologics by McKesson, was selected by Daiichi Sankyo, Inc., as a specialty pharmacy provider for VANFLYTA (quizartinib).
The same month, McKesson reported its first-quarter fiscal 2024 results, wherein it reported a solid uptick in its overall top line and bottom line. Robust performances by its U.S. Pharmaceutical, Prescription Technology Solutions and Medical-Surgical Solutions segments were also seen.
In June, McKesson launched its curated private brand of over-the-counter (OTC) health and wellness products, Foster & Thrive. The launch, expected to unify the company’s private brand portfolio, would consolidate Health Mart and Sunmark branded OTC products.
Price Performance
Shares of the company have gained 16.9% in the past year compared with the industry’s 10.4% rise and the S&P 500's 3.4% growth.
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Zacks Rank & Other Key Picks
Currently, McKesson carries a Zacks Rank #2 (Buy).
A couple of other top-ranked stocks in the broader medical space are Patterson Companies, Inc. PDCO and HealthEquity, Inc. HQY.
Patterson Companies, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 9.2%. PDCO’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average surprise of 4.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Patterson Companies has gained 13.3% compared with the industry’s 10.4% rise over the past year.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average of 9.1%.
HealthEquity has gained 11.4% against the industry’s 16.3% decline over the past year.
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McKesson Corporation (MCK) : Free Stock Analysis Report
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