McKesson Q4 Earnings Call Highlights

Key Points

• McKesson posted strong fiscal 2026 results, with revenue up 12% to $403 billion and adjusted EPS up 18% to $39.11. Fourth-quarter adjusted EPS rose 16% to $11.69 on broad-based demand across its businesses.
• Growth was led by specialty and oncology businesses, especially Oncology and Multispecialty, which saw revenue jump 35% and operating profit climb 53%. Prescription Technology Solutions also grew, while North American Pharmaceutical benefited from higher prescription and specialty volumes.
• The company issued upbeat fiscal 2027 guidance and continued capital returns, projecting adjusted EPS of $43.80 to $44.60 and about $5 billion in share repurchases. McKesson also advanced plans to separate Medical-Surgical Solutions, including financing and a $1.25 billion Apollo minority investment.

McKesson NYSE: MCK reported a stronger fiscal fourth quarter and full fiscal 2026 performance, with executives pointing to growth across its oncology, multispecialty, pharmaceutical distribution and prescription technology businesses, while outlining plans for continued earnings growth in fiscal 2027.

Chief Executive Officer Brian Tyler said the company grew adjusted earnings per diluted share by 18% in fiscal 2026, supported by momentum across its strategic growth platforms. He said operating cash flow totaled $6.2 billion and exceeded the company’s plans, while McKesson returned $5.1 billion to shareholders during the year.

“Fiscal 2026 was another great year of execution and disciplined portfolio actions that sharpened our focus and drove continued operating momentum,” Tyler said.

Fourth-Quarter and Full-Year Results

Chief Financial Officer Britt Vitalone said fiscal 2026 consolidated revenue reached $403 billion, up 12% from the prior year. Adjusted operating profit rose 15% to $6.5 billion, while adjusted earnings per diluted share increased 18% to $39.11. Excluding gains from McKesson Ventures investments in fiscal 2025, adjusted earnings per diluted share increased 20%, he said.

For the fiscal fourth quarter, McKesson reported adjusted earnings per diluted share of $11.69, up 16% year over year. Revenue increased 6% to $96.3 billion, while gross profit rose 14% to $3.9 billion. Adjusted operating profit grew 13% to $1.8 billion.

Vitalone said fourth-quarter growth was driven by broad-based demand across the portfolio, including specialty pharmaceutical distribution in North American Pharmaceutical, growth in Oncology and Multispecialty, and momentum in biopharma solutions programs within Prescription Technology Solutions.

McKesson also disclosed several GAAP-only items in the quarter, including net gains of $480 million tied to the divestiture of its retail and distribution businesses in Norway, $122 million of non-cash adjustments related to redeemable non-controlling interests from the Core Ventures acquisition, and a $182 million LIFO credit in North American Pharmaceutical.

Segment Performance Led by Specialty and Oncology

In North American Pharmaceutical, fourth-quarter revenue increased 3% to $79.1 billion, driven by higher prescription volumes and strength in specialty products. The increase was partially offset by lower branded pharmaceutical revenue, reflecting manufacturer price declines on certain products, which reduced year-over-year revenue growth by about 3 percentage points in the quarter. Segment operating profit rose 11% to $980 million.

GLP-1 distribution revenue reached $14 billion in the quarter, up $2 billion, or 22%, from the prior year, but down 4% sequentially. Vitalone said branded pricing declines and the sequential decline in GLP-1 volumes had no impact on operating profit in the quarter.

Oncology and Multispecialty revenue rose 35% to $12.7 billion, supported by provider growth, expanded specialty distribution and acquisitions. PRISM Vision and Core Ventures contributed approximately 13 percentage points to the segment’s revenue growth. Segment operating profit increased 53% to $385 million, while organic operating profit rose 13% excluding acquisitions.

Prescription Technology Solutions revenue increased 12% to $1.5 billion, driven by higher prescription volumes in third-party logistics and technology services. Operating profit rose 13% to $322 million, reflecting higher demand for access solutions.

Medical-Surgical Solutions revenue was $2.9 billion, up 1%, while operating profit declined 5% to $271 million. Vitalone said illness season product demand, including vaccines and testing, trended below the prior year.

Fiscal 2027 Outlook

McKesson issued fiscal 2027 adjusted earnings per diluted share guidance of $43.80 to $44.60, representing 12% to 14% year-over-year growth. Vitalone said that excluding fiscal 2026 revenue and operating profit from the divested Norway business and $51 million of gains tied to the sale of an equity investment in Market Decisions within The US Oncology Network, the outlook implies 14% to 16% growth.

The company expects fiscal 2027 revenue growth of 5% to 9% and adjusted operating profit growth of 8% to 12%. McKesson also reaffirmed its long-term target for adjusted earnings per diluted share growth of 13% to 16%.

• North American Pharmaceutical: Revenue growth of 4% to 8% and operating profit growth of 5.5% to 9.5%.
• Oncology and Multispecialty: Revenue growth of 14.5% to 18.5% and operating profit growth of 13.5% to 17.5%.
• Prescription Technology Solutions: Revenue growth of 2.5% to 6.5% and operating profit growth of 11% to 15%.
• Medical-Surgical Solutions: Revenue growth of 1% to 6% and operating profit growth of flat to 4%.

Vitalone said McKesson expects free cash flow of approximately $4.5 billion to $4.9 billion in fiscal 2027 and plans to repurchase approximately $5 billion of shares. The company anticipates weighted average diluted shares outstanding of 116 million to 118 million for the year.

Medical-Surgical Separation Advances

Tyler and Vitalone both highlighted progress toward separating the Medical-Surgical Solutions segment into an independent company. McKesson completed a $1 billion senior secured Term Loan A and a $1 billion revolving credit facility in April to help establish a standalone capital structure for the business.

The company also announced an agreement with Apollo Funds for a $1.25 billion strategic minority investment in Medical-Surgical Solutions, representing about a 13% minority interest and valuing the business at approximately $13 billion of total enterprise value. The transaction remains subject to regulatory approvals and customary closing conditions. McKesson said it will retain operating control and majority ownership.

Vitalone said McKesson expects to issue up to $2.25 billion in additional term loans in the second half of the first quarter of fiscal 2027, with proceeds from the financing transactions to be used to satisfy existing intercompany agreements with McKesson Corporation. He said the company intends to deploy those funds principally toward share repurchases, consistent with its capital allocation strategy.

Leadership Changes and Business Momentum

McKesson also announced leadership changes. Tyler said Vitalone, who is retiring as CFO, will continue supporting the company through the transition and serve as a strategic adviser, including on the planned Medical-Surgical separation. Tyler said that during Vitalone’s tenure as CFO, McKesson delivered more than a 500% increase in shareholder returns.

The company also said Don Knauss will complete his service on McKesson’s board before the 2026 annual stockholder meeting in July, in line with outside director age guidelines. Tyler was elected chairman of the board effective May 1, while Dominic Caruso will serve as lead independent director.

During the call, Tyler said McKesson’s Oncology and Multispecialty platform continued expanding, with The US Oncology Network adding more than 570 providers in fiscal 2026. He also said PRISM Vision increased providers by approximately 20% over the past year. In Prescription Technology Solutions, McKesson supported a record 3.4 million patients during annual verification season and helped patients save approximately $10 billion on brand and specialty medications over the past year, according to Tyler.

Executives said the company continues to invest in automation, artificial intelligence and technology-enabled services across its businesses, including distribution operations, physician workflow tools and access and affordability programs for biopharma customers.

About McKesson NYSE: MCK

McKesson Corporation NYSE: MCK is a global healthcare services and distribution company that supplies pharmaceuticals, medical-surgical products and health care technology solutions. Founded in 1833 and headquartered in Irving, Texas, McKesson operates across the drug distribution and healthcare services value chain, connecting manufacturers, pharmacies, hospitals and health systems to help manage the movement of medicines and clinical supplies.

The company's core activities include pharmaceutical wholesale distribution and logistics, specialty pharmacy services, and the provision of medical-surgical supplies to acute and non-acute care providers.

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