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McKesson starts Web unit
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June 12, 2000: 11:01 a.m. ET
Drug distributor forms Internet venture; drops co-CEO structure
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NEW YORK (CNNfn) - Leading U.S. drug distributor McKesson HBOC Inc. announced on Monday that it will create an online unit called iMcKesson, a venture that marks the company's first major foray into the growing field of Internet health care.
McKesson, struggling to rebound from a probe into its accounting practices, said the new division will serve doctors and hospitals, allowing physicians to order laboratory tests, view results, prescribe medications electronically and maintain patients' medical records.
In early Monday trading, McKesson shares rose 1/2 to 21-1/16.
 David Mahoney -- who was appointed McKesson co-chief executive a year ago after former CEO Mark A. Pulido resigned in the wake of an accounting scandal -- will head the new unit.
John Hammergren, McKesson's other co-chief executive, will become the sole CEO of McKesson HBOC (MCK: Research, Estimates), which includes the company's supply management, information technology, automation and pharmaceutical services businesses, e-commerce offerings and all corporate functions.
In April 1999, the San Francisco-based company disclosed an investigation of accounting irregularities at its newly acquired software unit, HBO & Co. The accounting problems forced the company to reduce its 1999 earnings twice. The company's stock fell about 46 percent in three months.
Meanwhile, federal regulators continue to investigate the company's accounting practices.
Health care companies have been closely watching the burgeoning "e-health" sector, enticed by the opportunity to save money by moving many administrative functions online. But amid the widespread Internet shakeout this year, many Web health firms have been struggling. Stocks in firms including Eclipsys Corp. (ECLP: Research, Estimates), Neoforma.com Inc. (NEOF: Research, Estimates) and Trizetto Inc. (TZIX: Research, Estimates) all have fallen sharply.
The business assets that will make up the iMcKesson unit have annual revenues of about $300 million. The Internet unit will have about 2,000 employees and will be based in San Francisco. 
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McKesson HBOC
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