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MCKESSON CORP

MCK
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Business Summary

McKesson Corporation is a diversified healthcare services leader operating in the highly regulated and evolving healthcare industry. The company partners with biopharma companies, care providers, pharmacies, manufacturers, governments, and others to deliver insights, products, and services to help make quality care more accessible and affordable. The industry is subject to extensive, complex, and frequently changing healthcare, environmental, and other laws, including the Inflation Reduction Act of 2022, the One Big Beautiful Bill enacted in July 2025, and Executive Order 14297, which create uncertainty for the business. The healthcare industry has experienced significant consolidation in recent years, and the company operates in highly competitive markets across North America.

McKesson operates in highly competitive markets and faces strong competition from international, national, regional, and local distributors. Its primary competitors in distribution, wholesaling, and logistics are Cencora, Inc. and Cardinal Health, Inc. The company believes its scale and the breadth of its product and service portfolio are key competitive advantages. In all areas, primary competitive factors include price, quality of service, product assortment, innovation, adoption of emerging technologies, and, in some cases, customer convenience. During fiscal 2026, sales to the company's ten largest customers accounted for approximately 73% of total consolidated revenues, and sales to its largest customer, CVS Health Corporation, accounted for approximately 24% of total consolidated revenues.

McKesson generates revenue primarily through the distribution of pharmaceutical and medical products, which represent the majority of its revenues. Revenues derived from distribution and retail business at the point of sale represent approximately 98% of total revenues for fiscal 2026. The company also earns revenues from a variety of other sources including its retail, services, and technology businesses. Revenues derived from services represent approximately 2% of total revenues for fiscal 2026. The company's primary customer segments include retail national accounts, community pharmacies, institutional healthcare providers, and biopharma companies. The company operates through four reportable segments: North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions, and Medical-Surgical Solutions.

The North American Pharmaceutical segment distributes branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs, and other healthcare-related products to customers in the United States and Canada. This segment also sells financial, operational, and clinical solutions to pharmacies and provides consulting, outsourcing, technological, and other services. Within U.S. Pharmaceutical, the company operates through a network of 27 distribution centers in the U.S., including two strategic redistribution centers. The segment also includes McKesson Canada, which operates approximately 2,600 independent pharmacies under five nationally recognized banners. For fiscal 2026, North American Pharmaceutical segment revenues were $336.652 billion .

The Oncology & Multispecialty segment includes provider solutions that encompass specialty drug distribution, group purchasing organizations, infusion services, direct to patient pharmacy capabilities, cell and gene therapy services, technology solutions, practice consulting services, and vaccine distribution. This segment supports the U.S. Oncology Network, one of the largest networks of physician-led, integrated, community-based oncology practices in the U.S. The segment also includes an 80% controlling interest in PRISM Vision, a 51% controlling interest in Sarah Cannon Research Institute, and Ontada, McKesson's oncology technology and insights business. For fiscal 2026, Oncology & Multispecialty segment revenues were $48.423 billion . The Prescription Technology Solutions segment helps solve medication access, affordability, and adherence challenges for patients. It has connections with over 50,000 pharmacies , more than 1,000,000 providers , and has supported over 650 biopharma brands . In the past year, it helped patients save approximately $10 billion on brand and specialty medications and helped prevent an estimated 12 million prescriptions from being abandoned. For fiscal 2026, Prescription Technology Solutions segment revenues were $5.805 billion . The Medical-Surgical Solutions segment is a leading provider of medical-surgical supplies, laboratory equipment, and pharmaceutical distribution to non-acute settings in the U.S. It offers more than 270,000 national brand medical-surgical products as well as its own line of more than 4,000 high-quality products through a network of distribution centers. For fiscal 2026, Medical-Surgical Solutions segment revenues were $11.507 billion .

During fiscal 2026, the company completed the acquisition of a controlling interest in PRISM Vision for $875 million in cash on April 1, 2025. On June 2, 2025, the company completed the acquisition of a controlling interest in Core Ventures for $2.5 billion in cash. On January 30, 2026, the company completed the sale of its Norway disposal group for an adjusted purchase price of $821 million , recording a net gain of $480 million . On May 30, 2025, the company completed a public debt offering of 4.65% Notes due 2030 in a principal amount of $650 million , 4.95% Notes due 2032 in a principal amount of $650 million , and 5.25% Notes due 2035 in a principal amount of $700 million , for total proceeds of $2.0 billion . During fiscal 2026, the company returned $5.1 billion of cash to shareholders through $4.8 billion of common stock repurchases and $381 million of dividend payments. On July 29, 2025, the Board raised the quarterly dividend from $0.71 to $0.82 per share. On April 20, 2026, the company announced a definitive agreement under which Apollo Funds will acquire approximately 13% minority ownership interest in the Medical-Surgical Solutions segment through an investment of approximately $1.25 billion in convertible preferred equity.

For fiscal 2026, total revenues were $403.430 billion , compared to $359.051 billion in fiscal 2025, representing a 12% increase. Gross profit was $14.550 billion in fiscal 2026, compared to $13.323 billion in fiscal 2025, a 9% increase. Total operating expenses decreased by 6% to $8.338 billion from $8.901 billion in the prior year. Net income attributable to McKesson Corporation was $4.762 billion in fiscal 2026, compared to $3.295 billion in fiscal 2025, a 45% increase. Diluted earnings per common share attributable to McKesson Corporation was $38.38 in fiscal 2026, compared to $25.72 in the prior year, a 49% increase.

Business Outlook

The company's fiscal 2027 outlook is contained in the release of its fourth quarter fiscal 2026 financial results included as an exhibit to its Form 8-K furnished to the SEC on May 7, 2026, which is not incorporated by reference into this Annual Report.

A key growth vector is the Oncology & Multispecialty segment, which the company is investing in organically and inorganically to further build an integrated oncology and multispecialty care platform. This is evidenced by the fiscal 2026 acquisitions of a controlling interest in PRISM Vision for $875 million and Core Ventures for $2.5 billion . The segment includes the U.S. Oncology Network, one of the largest networks of physician-led, integrated, community-based oncology practices, and SCRI, one of the nation's largest research networks. The company also sees growth in its Prescription Technology Solutions segment, which has connections with over 50,000 pharmacies and more than 1,000,000 providers , and has supported over 650 biopharma brands . The company is investing in data and analytics to support its growth priorities, including artificial intelligence, and is in the early stages of exploring potential AI capabilities across its enterprise.

Another major growth vector is the planned separation of the Medical-Surgical Solutions segment into an independent company. As part of this strategy, on April 20, 2026, the company announced a definitive agreement under which Apollo Funds will acquire approximately 13% minority ownership interest in the segment through an investment of approximately $1.25 billion in convertible preferred equity. The separation is expected to be effected through a split-off or spin-off, intended to qualify as a tax-free transaction. The company also continues to invest in its North American Pharmaceutical segment, including through its ClarusONE Sourcing Services LLP joint venture with Walmart Inc., which sources generic pharmaceutical drugs.

The company recorded restructuring charges of $170 million in fiscal 2026 related to enterprise-wide initiatives to drive operational efficiencies. These initiatives are intended to modernize and accelerate the technology service operating model, improve business continuity, compliance, and operating efficiency. The company anticipates total charges related to these initiatives of $650 million to $700 million , consisting primarily of employee severance and other employee-related costs as well as facility, exit and other related costs, including long-lived asset impairments. These programs are anticipated to be substantially complete in fiscal 2028. Additionally, a new initiative within the Prescription Technology Solutions segment was approved in the fourth quarter of fiscal 2026, with anticipated total charges between $200 million and $250 million , anticipated to be substantially complete by the end of fiscal 2029.

The company is investing in new and existing distribution centers to increase scale and capacity, improve efficiency through automation and technology, and enhance regulatory compliance capabilities. Capital expenditures for property, plant, and equipment were $436 million in fiscal 2026, and capitalized software expenditures were $309 million . The company also invests in data and analytics to support growth priorities, including artificial intelligence. As of March 31, 2026, the company had more than 43,000 employees worldwide, including 1,400 part-time employees .

The company's capital allocation strategy includes share repurchases and dividends. During fiscal 2026, the company returned $5.1 billion of cash to shareholders through $4.8 billion of common stock repurchases and $381 million of dividend payments. The total remaining authorization outstanding for repurchases of common stock at March 31, 2026 was $2.7 billion . On April 29, 2026, the Board approved the company to repurchase up to an additional $5.0 billion shares of common stock to a total authorization of $7.7 billion as of April 2026. In July 2025, the quarterly dividend was raised from $0.71 to $0.82 per share. Dividends declared were $3.17 per share in fiscal 2026. Research and development expenses were $103 million in fiscal 2026.

The company faces structural headwinds from healthcare reform efforts, including the Inflation Reduction Act of 2022, which authorized the government to negotiate drug prices for certain Medicare drugs, and the One Big Beautiful Bill, enacted in July 2025, which includes provisions expected to reduce Medicaid enrollment and federal funding. Executive Order 14297 seeks to facilitate manufacturers' sale of certain drugs at no higher than the lowest prices paid in other developed countries. CMS adopted a rule on bona fide service fees effective January 1, 2026, which creates risk that certifications could be challenged. The company also faces headwinds from the ongoing implementation of the 340B Drug Pricing Program and state drug pricing legislation. Additionally, the company is exposed to foreign currency exchange rate risk, primarily from the Canadian dollar, the Euro, and British pound sterling.

The company faces execution risks related to its planned separation of the Medical-Surgical Solutions segment, which is contingent upon the satisfaction of various conditions, including the receipt of a favorable tax opinion, effectiveness of a registration statement, and other governmental approvals. The company may not realize expected benefits from business process initiatives, and its growth strategy includes consummating acquisitions that may not perform as expected. The company also faces risks from customer concentration, as sales to its ten largest customers accounted for approximately 73% of total consolidated revenues in fiscal 2026, and sales to its largest customer, CVS Health Corporation, accounted for approximately 24% of total consolidated revenues.

Risk Factors

The company faces material risks from its role in distributing controlled substances, with an estimated accrued liability for opioid-related claims of $5.7 billion at March 31, 2026, of which $601 million is estimated to be paid within the next twelve months. The company is subject to extensive and frequently changing healthcare laws, including the Inflation Reduction Act, the One Big Beautiful Bill, and Executive Order 14297, which could significantly affect the pharmaceutical value chain and distribution economics. Customer concentration presents a significant risk, as sales to the ten largest customers accounted for approximately 73% of total consolidated revenues in fiscal 2026, and sales to the largest customer, CVS Health Corporation, accounted for approximately 24% of total consolidated revenues and approximately 21% of total trade accounts receivable at March 31, 2026. The company also faces risks from the planned separation of the Medical-Surgical Solutions segment, which is contingent on various conditions and may not achieve its intended benefits. Additionally, the company may record significant impairment charges to goodwill, which totaled $11.3 billion at March 31, 2026, if key assumptions change.

Management Priorities

Management's message emphasizes the company's role as a diversified healthcare services leader dedicated to advancing health outcomes for patients everywhere. The tone is forward-looking, with a focus on strategic growth initiatives, including the planned separation of the Medical-Surgical Solutions segment and investments in the Oncology & Multispecialty and Prescription Technology Solutions segments. Key strategic priorities include executing the separation of the Medical-Surgical Solutions segment, continuing to build an integrated oncology and multispecialty care platform, and expanding the biopharma services business. Management also highlights the company's capital allocation strategy, including returning $5.1 billion of cash to shareholders through $4.8 billion of common stock repurchases and $381 million of dividend payments in fiscal 2026. The company's fiscal 2027 outlook is contained in the release of its fourth quarter fiscal 2026 financial results included as an exhibit to its Form 8-K furnished to the SEC on May 7, 2026.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Business Segments
  2. [2] Item 7, MD&A — Overview of Segment Results
  3. [3] Item 1, Business — Prescription Technology Solutions Segment
  4. [4] Item 1, Business — Prescription Technology Solutions Segment
  5. [5] Item 1, Business — Prescription Technology Solutions Segment
  6. [6] Item 1, Business — Prescription Technology Solutions Segment
  7. [7] Item 1, Business — Prescription Technology Solutions Segment
  8. [8] Item 7, MD&A — Overview of Segment Results
  9. [9] Item 1, Business — Medical-Surgical Solutions Segment
  10. [10] Item 1, Business — Medical-Surgical Solutions Segment
  11. [11] Item 7, MD&A — Overview of Segment Results
  12. [12] Item 7, MD&A — Business Acquisitions and Divestitures
  13. [13] Item 7, MD&A — Business Acquisitions and Divestitures
  14. [14] Item 7, MD&A — Business Acquisitions and Divestitures
  15. [15] Item 7, MD&A — Overview of Consolidated Results
  16. [16] Item 7, MD&A — Executive Summary
  17. [17] Item 7, MD&A — Executive Summary
  18. [18] Item 7, MD&A — Executive Summary
  19. [19] Item 7, MD&A — Financing Activities
  20. [20] Item 7, MD&A — Executive Summary
  21. [21] Item 7, MD&A — Executive Summary
  22. [22] Item 7, MD&A — Executive Summary
  23. [23] Item 5, Market for Registrant's Common Equity
  24. [24] Item 5, Market for Registrant's Common Equity
  25. [25] Item 1, Business — Medical-Surgical Solutions Segment
  26. [26] Item 1, Business — Medical-Surgical Solutions Segment
  27. [27] Item 7, MD&A — Overview of Consolidated Results
  28. [28] Item 7, MD&A — Overview of Consolidated Results
  29. [29] Item 7, MD&A — Overview of Consolidated Results
  30. [30] Item 7, MD&A — Overview of Consolidated Results
  31. [31] Item 7, MD&A — Overview of Consolidated Results
  32. [32] Item 7, MD&A — Overview of Consolidated Results
  33. [33] Item 7, MD&A — Overview of Consolidated Results
  34. [34] Item 7, MD&A — Overview of Consolidated Results
  35. [35] Item 7, MD&A — Overview of Consolidated Results
  36. [36] Item 7, MD&A — Overview of Consolidated Results
  37. [37] Item 7, MD&A — Business Acquisitions and Divestitures
  38. [38] Item 7, MD&A — Business Acquisitions and Divestitures
  39. [39] Item 1, Business — Prescription Technology Solutions Segment
  40. [40] Item 1, Business — Prescription Technology Solutions Segment
  41. [41] Item 1, Business — Prescription Technology Solutions Segment
  42. [42] Item 1, Business — Medical-Surgical Solutions Segment
  43. [43] Item 1, Business — Medical-Surgical Solutions Segment
  44. [44] Item 7, MD&A — Restructuring Initiatives
  45. [45] Item 7, MD&A — Restructuring Initiatives
  46. [46] Item 7, MD&A — Restructuring Initiatives
  47. [47] Item 8, Note 3 — Restructuring, Impairment, and Related Charges, Net
  48. [48] Item 8, Note 3 — Restructuring, Impairment, and Related Charges, Net
  49. [49] Item 7, MD&A — Investing Activities
  50. [50] Item 7, MD&A — Investing Activities
  51. [51] Item 1, Business — Human Capital
  52. [52] Item 1, Business — Human Capital
  53. [53] Item 7, MD&A — Executive Summary
  54. [54] Item 7, MD&A — Executive Summary
  55. [55] Item 7, MD&A — Executive Summary
  56. [56] Item 7, MD&A — Share Repurchase Plans
  57. [57] Item 7, MD&A — Recent Developments
  58. [58] Item 7, MD&A — Recent Developments
  59. [59] Item 5, Market for Registrant's Common Equity
  60. [60] Item 5, Market for Registrant's Common Equity
  61. [61] Item 5, Market for Registrant's Common Equity
  62. [62] Item 1, Business — Research and Development
  63. [63] Item 1, Business — Other Information about the Business
  64. [64] Item 1, Business — Other Information about the Business
  65. [65] Item 7, MD&A — Critical Accounting Estimates
  66. [66] Item 7, MD&A — Material Cash Requirements
  67. [67] Item 1, Business — Other Information about the Business
  68. [68] Item 1, Business — Other Information about the Business
  69. [69] Item 1, Business — Other Information about the Business
  70. [70] Item 7, MD&A — Critical Accounting Estimates
  71. [71] Item 7, MD&A — Executive Summary
  72. [72] Item 7, MD&A — Executive Summary
  73. [73] Item 7, MD&A — Executive Summary
  74. [74] Item 8, Consolidated Statements of Operations
  75. [75] Item 8, Consolidated Statements of Operations
  76. [76] Item 8, Consolidated Statements of Operations
  77. [77] Item 8, Consolidated Statements of Operations
  78. [78] Item 8, Consolidated Statements of Operations
  79. [79] Item 8, Consolidated Statements of Operations
  80. [80] Item 8, Consolidated Statements of Operations
  81. [81] Item 8, Consolidated Statements of Operations
  82. [82] Item 7, MD&A — Overview of Consolidated Results
  83. [83] Item 7, MD&A — Overview of Consolidated Results
  84. [84] Item 8, Consolidated Statements of Cash Flows
  85. [85] Item 8, Consolidated Statements of Cash Flows
  86. [86] Item 8, Consolidated Balance Sheets
  87. [87] Item 8, Consolidated Balance Sheets
  88. [88] Item 7, MD&A — Material Cash Requirements
  89. [89] Item 7, MD&A — Selected Measures of Liquidity and Capital Resources
  90. [90] Item 7, MD&A — Selected Measures of Liquidity and Capital Resources
  91. [91] Item 7, MD&A — Overview of Consolidated Results
  92. [92] Item 7, MD&A — Restructuring Initiatives
  93. [93] Item 7, MD&A — Overview of Consolidated Results
  94. [94] Item 7, MD&A — Overview of Consolidated Results
  95. [95] Item 7, MD&A — Overview of Consolidated Results
  96. [96] Item 7, MD&A — Overview of Consolidated Results
  97. [97] Item 7, MD&A — Overview of Segment Results
  98. [98] Item 7, MD&A — Overview of Segment Results
  99. [99] Item 7, MD&A — Overview of Segment Results
  100. [100] Item 7, MD&A — Overview of Segment Results

Analysis on 6/8/2026