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    MCK
    Earnings call· Sep 2025(Q2 FY26)

    MCKESSON CORP MCK

    Nov 5, 2025 Source

    Executive summary

    McKesson Q2 FY26 — Strong Performance Drives Raised FY26 EPS Guidance

    McKesson delivered a strong Q2 FY26, exceeding expectations with robust revenue and adjusted EPS growth, driven by its diversified healthcare platform and strategic focus on oncology, multispecialty, and biopharma services. The company raised its full-year adjusted EPS guidance, reflecting confidence in continued operational execution and the benefits of its new reporting structure, despite some softness in the Medical-Surgical segment.

    Highlights

    5

    • Consolidated revenues increased 10% year-over-year to $103 billion.

    • Adjusted earnings per diluted share increased 39% to $9.86.

    • FY26 adjusted EPS guidance raised to $38.35-$38.85 (from $38.05-$38.55).

    • Operating profit reached a quarterly record of $1.6 billion, an increase of 26% year-over-year.

    • Second quarter free cash flow was $2.2 billion.

    Concerns

    2

    • Medical-Surgical Solutions segment experienced softer illness season product demand (vaccines and testing) and lower volumes across ambulatory and extended care settings, representing an approximate 4% headwind to revenue compared to the prior year.

    • Medical-Surgical Solutions revenue and operating profit are anticipated at the low end of 2% to 6% growth for FY26.

    Guidance & targets

    20
    CategoryTargetConfidence
    Adjusted earnings per diluted share
    $38.35 to $38.85
    high materiality
    High
    Revenue growth
    11% to 15%
    high materiality
    High
    Operating profit growth
    12% to 16%
    high materiality
    High
    North American Pharmaceutical segment revenue growth
    10% to 14%
    medium materiality
    High
    North American Pharmaceutical segment operating profit growth
    5% to 9%
    medium materiality
    High
    Oncology and Multispecialty segment revenue growth
    27% to 31%
    medium materiality
    High
    Oncology and Multispecialty segment operating profit growth
    49% to 53%
    medium materiality
    High
    Prescription Technology Solutions segment revenue growth
    9% to 13%
    medium materiality
    High
    Prescription Technology Solutions segment operating profit growth
    13% to 17%
    medium materiality
    High
    Medical-Surgical Solutions segment revenue and operating profit growth
    low end of 2% to 6%
    medium materiality
    Medium
    Corporate expenses
    $600 million to $650 million
    low materiality
    High
    Interest expense
    $210 million to $240 million
    low materiality
    High
    Income attributable to noncontrolling interest
    $215 million to $235 million
    low materiality
    High
    Full year effective tax rate
    18% to 19%
    low materiality
    High
    Third quarter effective tax rate
    23% to 25%
    low materiality
    High
    Free cash flow
    $4.4 billion to $4.8 billion
    high materiality
    High
    Share repurchases
    approximately $2.5 billion
    high materiality
    High
    Weighted average diluted shares outstanding
    approximately 124 million
    low materiality
    High
    Medical-Surgical Solutions business separation completion
    by the second half of calendar 2027
    high materiality
    Medium
    Norway held-for-sale accounting accretion
    approximately $0.13
    low materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    North American Pharmaceutical
    Growth reflects solid pharmaceutical utilization, including higher volumes from retail national account customers and specialty products, new product launches, and continued operating expense efficiencies.
    Operating profit growth: 13%GLP-1 medications revenue: $13.2 billionGLP-1 medications revenue YoY increase: $2.6 billionGLP-1 medications revenue YoY growth: 24%GLP-1 medications revenue sequential growth: 6%
    		$86.5 billion8%—$851 million
    Oncology and Multispecialty
    Driven by strong provider and specialty distribution growth, including contributions from acquisitions completed in Q1 FY26. Also includes nonrecurring net gains from an equity investment and market decisions within the U.S. Oncology Network.
    Operating profit growth: 71%Acquisitions (PRISM and Core Ventures) contribution to revenue growth: ~12%Acquisitions (PRISM and Core Ventures) contribution to operating profit growth: ~50%Nonrecurring net gains (equity investment and market decisions) in operating profit: $51 millionOrganic operating profit growth (excluding acquisitions and nonrecurring gains): 13%
    		$12 billion32%—$397 million
    Prescription Technology Solutions
    Driven by increased prescription volumes across third-party logistics and technology services businesses, and increased demand for access solutions, particularly prior authorization services for GLP-1 medications.
    Operating profit growth: 20%
    		$1.4 billion9%—$261 million
    Medical-Surgical Solutions
    Softer illness season product demand (vaccines and testing) and lower volumes across ambulatory and extended care settings, partially offset by operational efficiencies from cost optimization initiatives.
    Operating profit growth: 2%Illness season product demand headwind to revenue: ~4%
    		$2.9 billionflat—$249 million
    Corporate
    Corporate expenses were flat compared to the prior year, excluding the impact of equity investments (Q2 FY25 recorded $15 million pretax losses vs Q2 FY26 $3 million pretax gains).
    Pretax gains related to equity investments: $3 million
    		———-$151 million

    Operational metrics

    22
    Consolidated Revenues
    $103 billion10% year-over-year increase
    Q2 FY26

    Reflects sustained momentum and strength of diversified portfolio.

    Adjusted Earnings Per Diluted Share
    $9.8639% increase year-over-year
    Q2 FY26

    Driven by robust core operational performance, contributions from acquisitions, net gains from equity investment/market decisions, and a lower effective tax rate.

    Gross Profit
    $3.5 billion9% increase
    Q2 FY26

    Primarily due to strong specialty distribution and provider growth within the Oncology and Multispecialty segment.

    Operating Expenses
    $2 billion1% decrease
    Q2 FY26

    Reflecting divestitures in Canadian business and disciplined cost optimization initiatives in Medical-Surgical Solutions segment, partially offset by investments in Oncology and Multispecialty segment.

    Operating Expenses as Percentage of Gross Profit
    570 basis pointsdeclined
    Q2 FY26

    Delivering significant operating leverage due to focus on cost discipline and operational efficiency.

    Interest Expense
    $68 million6% decline
    Q2 FY26

    Resulting from effective cash and portfolio management, including derivative portfolio.

    Effective Tax Rate
    17.5%compared to 21% in prior year
    Q2 FY26

    Recognized net discrete tax benefits of $96 million, primarily related to the release of a valuation allowance.

    Net Discrete Tax Benefits
    $96 millioncompared to $44 million in Q2 FY25
    Q2 FY26

    Primarily related to the release of a valuation allowance.

    Diluted Weighted Average Shares Outstanding
    124.4 million4% decrease
    Q2 FY26

    Reflects share repurchases.

    Cash and Cash Equivalents
    $4 billion
    Q2 FY26

    Underscores strong liquidity position and capacity to deploy capital.

    Capital Expenditures
    $196 million
    Q2 FY26

    Included in free cash flow calculation.

    Share Repurchases
    $818 million
    Q2 FY26

    Part of $907 million returned to shareholders in the quarter.

    Dividend Payments
    $89 million
    Q2 FY26

    Part of $907 million returned to shareholders in the quarter.

    Norway Held-for-Sale Accounting Accretion
    $0.03
    Q2 FY26

    Resulted from discontinuing depreciation and amortization on assets involved in the transaction due to held-for-sale accounting treatment.

    Acquisitions Contribution to Oncology and Multispecialty Operating Profit Growth
    30% to 34%
    FY26

    Anticipated contribution to the segment's full fiscal year operating profit growth.

    U.S. Oncology Network Providers
    3,300
    Q2 FY26

    Supporting providers across more than 700 sites across the country.

    InspiroCare Cold Chain Facility Size
    12,000
    Q2 FY26

    Dedicated to cell and gene therapy distribution, equipped with specialized storage technology.

    PRISM Vision Spokane Eye Clinic Specialists
    27
    Q2 FY26

    Spokane Eye Clinic has a growing team of 27 eye care specialists in 4 clinic locations, extending PRISM Vision's reach beyond the Mid-Atlantic region.

    Prescription Technology Solutions Network Providers
    1 million
    Q2 FY26

    Part of the network that spans approximately 1 million providers and more than 50,000 pharmacies.

    Prescription Technology Solutions Network Pharmacies
    50,000
    Q2 FY26

    Part of the network that spans approximately 1 million providers and more than 50,000 pharmacies.

    Prescription Technology Solutions Annual Transactions
    23 billion
    annual

    This connectivity and scale is the foundation that enables streamlining access to therapies.

    Automation Human Touches Reduction
    2from 8 human touches
    Q2 FY26

    An example of advanced automation technologies like the order storage retrieval system, reducing human touches from 8 to 2.

    Industry KPIs

    4
    MetricValueDetails
    Utilization trends—
    Pharmacy scripts specialty$13.2 billionUSD
    Segment revenue operating income$86.5 billionUSD
    Adjusted EPS EBITDA leverage guidance$9.86EPS

    Product announcements

    2
    ProductTypeDetails
    InspiroCarelaunch
    World-class cold chain facilitylaunch

    Deals & partnerships

    4
    Blood Cancer UnitedCollaboration to strengthen cancer care and access to clinical trials.

    The U.S. Oncology Network formed a collaboration with Blood Cancer United to provide personalized clinical trial education, clinical trial matching through the Sarah Cannon Research Institute, and patient navigation services for blood cancer patients.

    Florida Cancer SpecialistsIntegration of practice group onto distribution and GPO agreements.

    Progress continued with the integration of Florida Cancer Specialists, bringing the practice group onto McKesson's distribution and GPO agreements.

    PRISM VisionIntegration of practice group onto distribution and GPO agreements.

    Progress continued with the integration of PRISM Vision, bringing the practice group onto McKesson's distribution and GPO agreements.

    Spokane Eye ClinicExpansion of PRISM Vision's footprint.

    PRISM Vision recently expanded its footprint with the addition of Spokane Eye Clinic, located in Spokane, Washington, which has 27 eye care specialists in 4 clinic locations.

    Risks & headwinds

    2
    Softer illness season product demand and lower volumes in Medical-Surgical SolutionsQ2 FY26, impacting FY26 outlook

    Represented an approximate 4% headwind to Medical-Surgical Solutions revenue compared to the prior year.

    Mitigation: Operational efficiencies from cost optimization initiatives partially offset the impact.

    Variability in Prescription Technology Solutions revenue and operating profit trajectoryQuarter-to-quarter

    Not quantified

    Mitigation: Driven by several factors including utilization trends, timing and trajectory of new product drug launches, evolution of product program support requirements, product delays and supply shortages, payer requirements, annual verification programs, and the size and timing of investments.

    What to watch in Q3 FY26

    5

    Medical-Surgical Solutions Performance

    Next quarter
    CurrentRevenue and operating profit at low end of 2-6% growth for FY26
    TargetConfirmation of growth within or above the low end of the 2-6% range, particularly regarding illness season product demand.

    Why it matters

    This segment has faced headwinds from softer illness season product demand and lower volumes, impacting its contribution to overall company performance.

    Due to lower-than-anticipated illness season product volumes compared to the prior year, including vaccines and testing and lower volumes across ambulatory and extended care settings, we anticipate revenue and operating profit at the low end of 2% to 6% growth.

    Q&A highlights

    7

    What is driving the margin expansion in RxTS, and how should we think about the impact of incremental investments in the second half of FY26?

    Margin expansion in RxTS is driven by a favorable mix towards technology services components, including new products, programs, and growth in access solutions like prior authorizations for GLP-1 medications. The company anticipates higher investment spending in the second half of the year, which has been factored into the guidance, but expects strong operating profit growth to continue.

    “So it's a little bit of all of those things that are all driving in the right direction and the mix from those technology services is driving more margin growth in that segment.”

    asked by Lisa Gill · answered by Britt Vitalone

    2 min read6 chapters

    Detailed Narrative

    01

    New Reporting Structure

    McKesson implemented a new reporting structure beginning in Q2 FY26 to enhance transparency and sharpen visibility into its growth platforms. This framework highlights differentiated capabilities within the newly formed Oncology and Multispecialty segment and the North American Pharmaceutical segment. The company is pleased with the consistent financial performance delivered under this new structure, which is expected to optimize portfolio management and drive sustainable long-term value.

    02

    Oncology and Multispecialty Platform Growth

    The Oncology and Multispecialty segment is a central pillar of McKesson's growth strategy, focusing on accelerating growth in higher-margin segments. It leverages unparalleled distribution breadth, group purchasing organizations, specialty pharmacy offerings, and infusion management services. This platform supports over 14,000 providers across various specialties, including the launch and commercialization of cell and gene therapies.

    03

    Biopharma Services and Prescription Technology Solutions

    Within the Prescription Technology Solutions segment, the biopharma services platform utilizes a leading technology platform to make medicine more accessible and affordable. Its network spans approximately 1 million providers and over 50,000 pharmacies, processing around 23 billion transactions annually. This integrated approach includes tech-driven patient support, automated prior authorization, and co-pay programs, positioning McKesson as a trusted leader in solving access and affordability challenges.

    04

    North American Pharmaceutical Business and Automation

    The North American Pharmaceutical business continues to deliver strong growth, underpinned by operational discipline and a differentiated value proposition. McKesson has made significant investments in automation, such as the order storage retrieval system in its U.S. national redistribution center. This system has improved operating efficiency and accuracy, reducing the number of human touches required for a pick, pack, and ship process from eight to two.

    05

    Drug Supply Chain Security Act (DSCSA) Implementation

    In August, McKesson's U.S. Pharmaceutical business achieved a major milestone by actively exchanging serialized transaction data with supply chain participants, complying with new FDA requirements under the DSCSA. This complex implementation was executed with extraordinary collaboration across the enterprise, maintaining exceptional service levels and accuracy with almost no disruption to customers, enhancing the safety and transparency of the pharmaceutical supply chain.

    06

    Medical-Surgical Solutions Separation Progress

    McKesson continues to actively execute on the separation of its Medical-Surgical business, positioning it to become an independent, well-capitalized operating company. The company targets exiting the business through an initial public offering, followed by a spin-off or split-off of its remaining interest. This separation is anticipated to be completed by the second half of calendar 2027, subject to market conditions and regulatory approvals.

    AI-generated summary of the company’s earnings call. Not investment advice.