McKesson Plans Big Job Cuts To Trim Costs

CA: Companies In California
A logo sign at the headquarters of McKesson in downtown San Francisco, California, on December 29, 2014. Photo Credit: Kristoffer Tripplaar/ Sipa USA *** Please Use Credit from Credit Field ***
Photograph by Kris Tripplaar — Sipa USA/AP

(Reuters) – U.S. drug distributor McKesson Corp said on Wednesday it cut 1,600 jobs, or about 4% of its U.S. workforce, to slash costs after the company lost some key customers.

McKesson said in January it would review its cost structure and decided that “reductions to our workforce would be necessary to align our cost structure with our business needs,” the company said in an e-mailed statement.

Bloomberg first reported the news on Wednesday, which a McKesson spokesman later confirmed to Reuters.

The company said it started informing workers about the lay-offs in mid-March.

McKesson (MCK) also said it was offering severance benefits and outplacement services for impacted employees.

The company, which distributes drugs to retailers such as CVS Health Corp, said in January its fiscal 2017 earnings would likely be hit by weak generic drug pricing.

McKesson also expects to be weighed down by an expiration of its contract with pharmacy benefit manager Optum and changes in contracts with Omnicare and Target (TGT).

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It has focused on inking deals to spur growth. McKesson said it would buy Canadian drugstore chain Rexall Health for $2.23 billion in March and said it was buying two privately held cancer care service providers for a total of $1.2 billion in February.

As of March 2015, the company employed about 70,400 full-time workers, according to a regulatory filing.

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