McKesson Corporation

McKesson Corporation distributes pharmaceuticals and medical supplies and provides services to specialist practices and drug manufacturers. It trades on the New York Stock Exchange under MCK. Its fiscal year ends March 31.

Quarterly financial results

The adjusted measures remove specified acquisition-related amortization, transaction costs and adjustments, restructuring and impairment charges, inventory-accounting adjustments, antitrust settlements and other items. They retain discrete tax benefits of $105 million in the latest quarter and $119 million a year earlier. Adjusted EPS grew faster than adjusted earnings because of the smaller share count.

North American Pharmaceutical revenue rose to $91.360 billion from $86.481 billion, and adjusted segment profit to $1.040 billion from $851 million. Oncology & Multispecialty revenue reached $14.980 billion from $12.044 billion, with adjusted profit of $427 million versus $397 million. The prior-year figure included a $51 million investment and market-related gain; excluding that gain, the company reports profit growth of 23%.

Prescription Technology Solutions increased revenue to $1.520 billion from $1.376 billion and adjusted segment profit to $307 million from $261 million. Medical-Surgical Solutions revenue rose to $3.097 billion from $2.947 billion, but adjusted profit fell to $225 million from $249 million. Its adjusted margin narrowed to 7.27% from 8.45% because of product mix in ambulatory care, partly offset by extended-care growth.

Annual outlook and earlier expectations

Fiscal 2027 adjusted EPS is now forecast at $45.60 to $46.40, compared with $44.20 to $45 issued in August and the original May range of $43.80 to $44.60. Group revenue growth is now 6% to 10%, up from 5% to 9%, and adjusted operating-profit growth 12% to 16%, up from 9% to 13%.

North American Pharmaceutical's adjusted profit-growth target rose to 14% to 18%, from the high end of 5.5% to 9.5%. Oncology & Multispecialty's revenue-growth range rose to 20% to 24% from 14.5% to 18.5%, and its adjusted profit-growth target to 18% to 22% from 13.5% to 17.5%. Prescription Technology Solutions retains an 11% to 15% adjusted profit-growth target.

Medical-Surgical Solutions now expects adjusted profit to fall by up to 4%, replacing flat to 4% growth. Its revenue-growth range remains 1% to 6%. The group forecasts $4.5 billion to $4.9 billion of free cash flow, about $5 billion of buybacks, an adjusted tax rate of 18% to 19% and 115.5 million to 117.5 million diluted shares, all unchanged from August.

Cash, debt and capital returns

First-half operating cash flow was $2.850 billion, versus $1.502 billion. Deducting $177 million of property and equipment spending and $98 million of capitalized software gives $2.575 billion of free cash flow, versus $1.117 billion. Supplier-payment scheduling and period-end timing helped operating cash, while higher inventory, receivables and tax payments absorbed cash. Quarterly operating cash flow was $3.070 billion and free cash flow $2.947 billion.

First-half buyback cash was $3.424 billion and dividends $198 million. The buyback-program table reports $3.439 billion of cost before excise tax, including $15 million settled in October. Approximately $4.280 billion of authorization remained at September 30.

Cash and equivalents were $6.528 billion at September 30, with $91 million of restricted cash separately reported. Debt carrying value was $9.208 billion, versus $6.526 billion at March 31, including $153 million of lease and other obligations. Of the September debt total, $794 million was current. Operating-lease liabilities and litigation liabilities are reported separately.

The parent has a $5 billion revolving facility maturing in April 2031 and a $5 billion commercial-paper program; neither was drawn at September 30. Medical-Surgical subsidiaries have a separate $1 billion undrawn revolver and term loans. The parent and subsidiaries outside that borrower group do not guarantee those facilities. McKesson repaid its maturing euro notes in October. The September cash balance also predates the November acquisitions.

Completed and pending transactions

McKesson completed the approximately $2.25 billion cash acquisition of Precision Medicine Group on November 2, 2026, and the purchase of a controlling interest in Spectrum Vision Partners for approximately $525 million in early November. Both enter Oncology & Multispecialty in fiscal Q3. Precision Medicine Group is expected to contribute $0.10 to $0.20 of adjusted EPS in fiscal 2027, mainly in Q4.

The agreement to invest about $1.4 billion for 49% of Option Care Health remains pending, with closing expected in the first half of calendar 2027, subject to approvals. CD&R would hold 51%. McKesson expects equity-method accounting, and the current annual outlook excludes the investment's contribution.

Apollo funds completed their roughly $1.25 billion investment for about 13% of Medical-Surgical Solutions in June. Net proceeds were $1.238 billion. McKesson retains control and continues to consolidate the segment while planning its separation into an independent company. The first-half $282 million adjustment to the preferred interest's redemption value affected income attributable to noncontrolling interests; it was not a new cash payment.

The principal developments to follow are specialty-drug volumes, medical-supply margins, integration of the completed acquisitions, cash generation after working-capital movements, and the terms and timing of the remaining portfolio changes.