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McKesson fires chairman
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June 21, 1999: 3:17 p.m. ET
CEO, CFO resign, tech unit execs axed; accounting irregularities cited
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NEW YORK (CNNfn) - Drug supplier McKesson HBOC Inc. Monday fired its board chairman and appointed new top management in connection with ongoing accounting irregularities at its recently acquired software unit.
Charles W. McCall was fired as chairman and dismissed as an employee, the company said. The company's chief executive officer, Mark A. Pulido, and chief financial officer, Richard H. Hawkins, resigned.
But an even broader shakeup was reserved for McKesson's information technology business unit, the troubled division spawned from the purchase last year of healthcare software producer HBO & Co..
There, the board of directors dismissed all top management with cause after an ongoing audit found continuing accounting improprieties.
But the shakeup wasn't enough to halt McKesson's sliding stock price. Shares in the San Francisco-based company, down 46 percent in the last three months, fell 2-3/16 to 33-7/8 in late afternoon trading Monday.
Analysts called the move unsurprising
"Somebody had to pay the price for the HBOC acquisition," said Michael Krensavage, a pharmaceutical analyst at Brown Brothers Harriman, which has a "hold" rating on Mckesson stock.
Krensavage said the changes are a step in the right direction but now, "the real information we're looking for is what condition HBOC is in -- obviously it's not in the condition that McKesson thought it was. The question is, 'How bad is it?' "
To fill the leadership void, John H. Hammergren, and David L. Mahoney, both previously executive vice presidents, were appointed co-chief executive officers.
Heidi E. Yodowitz, senior vice president and controller, has been appointed acting chief financial officer.
The shakeup comes after McKesson twice this year revised its fiscal 1999 earnings downward due to accounting irregularities at HBO & Co. The company announced in late April that a regular year-end audit discovered that software sales at the unit had been improperly recorded, inflating sales by about $42.2 million.
Then, on May 25, the company said earnings would be revised down even more than earlier estimated and could involve other items and prior years.
McKesson didn't provide further details on the accounting irregularities Monday, but said the problem will delay the filing of its annual report, due June 30.
"These changes reflect our need to move the company forward as quickly as possible," said Alan Seelenfreund, a former McKesson CEO who was appointed "non-executive chairman of the board. "Under the circumstances, strong leadership is essential to this effort."
McKesson stock, down 46 percent since March
In the shake-up, information technology business unit president and CEO Albert Bergonzi, CFO and controller David Held, and other HBOC top managers were dismissed with cause.
In strong language, McKesson called the move necessary to turn the company around.
"Because of the nature of accounting improprieties that we have found, and the participation of senior level employees of this business in such improprieties, we felt compelled to take prompt and decisive action," Seelenfreund said. "The failure of responsible leadership in the ITB business has harmed our entire employee population and shareholders, and cannot be tolerated."
McKesson last made headlines 10 months ago when the company canceled its $2.25-billion bid for AmeriSource Health after a federal judge granted a government request to block the merger.
The failed bid came three months after McKesson announced its purchase of HBO & Co. 
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McKesson
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