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For the second time in a month, the bubble has burst for key managers of a high-flying healthcare/Internet firm.
McKesson HBOC (San Francisco) on Monday fired Chairman Charles McCall, a move putting him at the center of the company’s recent accounting problems and subsequent plunge in share value. Additionally, the company said that two other officers, CEO Mark Pulido and CFO Richard Hawkins, would be resigning from the company, effective July 15.
The three were key people at the helm of the company’s healthcare IT unit, created through the acquisition of HBOC by McKesson earlier this year.
Coincidentally or not, the dismissals come on the heels of WebMD’s recent release of Jay Gilbertson, the company’s president and COO and formerly HBOC’s chief financial officer. Gilbertson resigned from HBOC after its purchase by McKesson and shortly before the merged company’s accounting strategies began to unravel and the company acknowledged finding a total of $42.2 million in sales improperly recorded.
Release of the top McKesson HBOC executives comes in the rough wake of the company’s April earnings restatements, a nearly 50% plunge in the firm’s share value and a flurry of class action filings alleging fraud.
With the firing, McKesson leadership charged that HBOC had not offered full due diligence disclosures preliminary to its being purchased. And analysts’ statements, as reported by the New York Times, indicate the belief that the accounting problems were not honest mistakes but part of a deliberate fraud.
In announcing the release of McCall, Pulido and Hawkins, plus four others associated with the accounting glitches, McKesson spokesperson Larry Kurtz declined to say whether Gilbertson also had been associated with them. However, in comments made to the Atlanta Journal-Constitution, Kurtz did offer more information about the accounting difficulties, saying that contingency sales proposed but not satisfied had been improperly recorded as finalized and then apparently hidden from auditors. The auditing woes aren’t improving, since McKesson HBOC also said on Monday that it has not been able to complete the revised audit and will miss its June 30 annual report deadline.
McCall will not walk away from the company empty-handed. He owns 1.7 million shares of HBOC stock and has been considered a key to the company’s growth. That growth was one factor in making the company a prime acquisition target for McKesson, but the purchase came with a good-sized question mark as well. Analysts questioned the fit between the two companies, and that issue still must be resolved. Meanwhile, industry watchers are saying that McKesson's release of the IT unit’s executives is an attempt to produce a clean slate for shareholders and allow it to move forward.