November 5, 2026·42 min read
McKesson Corporation (MCK), Financial Analysis
Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.
Revenues Q2 FY2027
$111.0bn
+7.6% year on year (Q2 FY2026 $103.2bn)
Operating costs Q2 FY2027
$109.4bn
+7.5% year on year (Q2 FY2026 $101.7bn)
Operating margin Q2 FY2027
1.4%
+0.1 pts year on year (Q2 FY2026 1.4%)
Key findings
- Q2 FY2027 (quarter to 30 Sep 2026) revenue $111.0bn, +7.6%; GAAP diluted EPS $10.44 against $8.92; adjusted EPS (non GAAP) $11.68, +18%. McKesson raised FY2027 adjusted EPS guidance to $45.60 to $46.40 from $44.20 to $45.00, its second raise since May 2026.
- North American Pharmaceutical revenue $91.4bn, +6%, adjusted operating profit $1.04bn, +22%, at a 1.14% adjusted margin. GLP‑1 distribution revenue was about $16bn, +26%, stated on the call; branded list price cuts of Jan 2026 reduced segment revenue growth by about 4 points.
- Oncology & Multispecialty revenue $15.0bn, +24%, led by provider network acquisitions; since Q2 McKesson closed Precision Medicine Group (about $2.25bn) and Spectrum Vision (about $525m) and agreed to buy about 49% of Option Care Health for about $1.4bn.
- Medical‑Surgical Solutions, to become Wellverse, revenue $3.10bn, +5%, adjusted profit $225m, (10%). Apollo funds bought about 13% for $1.25bn and the segment raised $3.2bn of secured term loans; a phased transition is to start in Jan 2027, stated on the call.
- Obligations: total debt $9.2bn at 30 Sep 2026 against $6.5bn at 31 Mar 2026, opioid liability $5.2bn, redeemable NCI $2.6bn and a stockholders' deficit of ($3.95bn), so ROE is not meaningful. A cybersecurity incident found on 25 Aug 2026 has led to putative class actions.
- Shares at $1,100.40 (intraday 5 Nov 2026) trade at 23.9x the FY2027 adjusted EPS guidance midpoint and 28.3x TTM GAAP EPS, +36% on the Oct 2025 close. Model base case $1,468 in FY2030, range $709 to $2,443.
Figures are read from the Forms 10-K for FY2023 to FY2026 (year to 31 March), the Forms 10-Q for Q1 FY2026 to Q2 FY2027 (Q2 FY2027 filed 4 Nov 2026), the Forms 8-K with all their exhibits, incl. the quarterly results releases (Ex 99.1), the credit agreements (Ex 10.1), the CFO transition release and advisor agreement and the Option Care Health release, CFO commentary in the releases and on the earnings calls, the 2026 proxy statement with the Form 8-K Item 5.07 vote results, Forms 4 for central index key 927653, and the filings of Cencora, Cardinal Health, Henry Schein and Accendra Health used in chapters 2 to 4 and 8.
1 Revenue & Business Model
- Storyline: McKesson grows earnings on drug distribution volume while moving capital into oncology and specialty services and separating its Medical‑Surgical business. Revenue rose from $264.0bn in FY2022 to $403.4bn in FY2026 at an operating margin between 0.77% and 1.58%. Chapter 2 covers North American Pharmaceutical, chapter 3 Oncology & Multispecialty and chapter 4 Medical‑Surgical and the Wellverse separation.
- Four reportable segments, TTM Q2 FY2027 revenue: North American Pharmaceutical $345.6bn (82.5%), Oncology & Multispecialty $54.9bn (13.1%), Medical‑Surgical Solutions $11.8bn (2.8%) and Prescription Technology Solutions $6.08bn (1.5%). Other held the Norway business until its sale on 30 Jan 2026.
- Segment basis changed in Q2 FY2026: FY2022 to FY2024 were first reported on a four segment basis (US Pharmaceutical, Prescription Technology Solutions, Medical‑Surgical, International); the FY2026 10-K recasts FY2024 to FY2026 on the current basis, with Canada moved into North American Pharmaceutical and specialty and oncology moved into Oncology & Multispecialty, so the two series do not join.
- Revenue model: distribution revenue includes the full cost of the drugs, so gross margin was 3.61% in FY2026; more than 95% of the branded business is fee for service, stated on the call. Foreign operations were about 4% of FY2026 revenue, mainly Canada; CVS Health was 24% and the ten largest customers 73% of FY2026 revenue (10-K).
- Profit mix FY2026, adjusted segment operating profit (non GAAP): North American Pharmaceutical $3.45bn, Oncology & Multispecialty $1.44bn, Prescription Technology Solutions $1.13bn at a 19.4% margin and Medical‑Surgical $1.03bn at 8.9%.
Table 1.1 Revenue by segment, last five quarters ($m)
| Segment | Q2 FY2026 | Q3 FY2026 | Q4 FY2026 | Q1 FY2027 | Q2 FY2027 | Q2 growth (%) |
|---|---|---|---|---|---|---|
| North American Pharmaceutical | 86,481 | 88,322 | 79,120 | 86,773 | 91,360 | 5.6 |
| Oncology & Multispecialty | 12,044 | 13,010 | 12,711 | 14,222 | 14,980 | 24.4 |
| Prescription Technology Solutions | 1,376 | 1,500 | 1,495 | 1,566 | 1,520 | 10.5 |
| Medical‑Surgical Solutions | 2,947 | 2,991 | 2,868 | 2,819 | 3,097 | 5.1 |
| Other | 302 | 335 | 101 | 0 | 0 | n/m |
| Total revenues | 103,150 | 106,158 | 96,295 | 105,380 | 110,957 | 7.6 |
Source: 8-K Ex 99.1 Schedule 3 and the Form 10-Q segment note; Q4 FY2026 equals FY2026 less 9M FY2026. Other is the Norway business, sold 30 Jan 2026.
Table 1.2 Revenue by segment on the prior basis, FY2022 to FY2024 ($m)
| Segment | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| US Pharmaceutical | 212,149 | 240,616 | 278,739 |
| Prescription Technology Solutions | 3,864 | 4,387 | 4,769 |
| Medical‑Surgical Solutions | 11,608 | 11,110 | 11,313 |
| International | 36,345 | 20,598 | 14,130 |
| Total | 263,966 | 276,711 | 308,951 |
As first reported in the FY2024 10-K; not comparable with the current basis (Medical‑Surgical FY2024 revenue $11.309bn on the current basis against $11.313bn on the prior basis).
Table 1.3 Operating metrics
| Metric | Earlier | Prior | Latest |
|---|---|---|---|
| GLP‑1 distribution revenue, stated on the call ($bn) | about 14 (Q4 FY2026, +22%) | about 15 (Q1 FY2027, +24%) | about 16 (Q2 FY2027, +26%) |
| US Oncology Network providers | about 3,300 (Jun 2025) | about 3,400 (Q1 FY2027) | above 3,400 (Q2 FY2027) |
| PRISM Vision providers | n/a | above 200 (Q1 FY2027) | above 350 (Nov 2026) |
| Opioid litigation liability ($m) | n/a | 5,692 (31 Mar 2026) | 5,163 (30 Sep 2026) |
| Quarterly dividend per share ($) | 0.71 (Jul 2024) | 0.82 (Jul 2025) | 0.94 (Jul 2026) |
| Weighted diluted shares (m) | 128.1 (FY2025) | 124.1 (FY2026) | 116.7 (Q2 FY2027) |
GLP‑1 revenue is stated on the earnings calls; filings give no GLP‑1 revenue figure. Provider counts are approximate, from releases and calls.
2 North American Pharmaceutical: GLP‑1 Volume and Fee Based Distribution
- Revenue $91.4bn in Q2 FY2027, +5.6%, 82.3% of group revenue; adjusted operating profit $1.04bn, +22.2%, margin 1.14% against 0.98%; GAAP segment profit $1.09bn.
- Drivers (10-Q): US sales +$4.6bn from institutional providers and retail national accounts; market growth incl. GLP‑1 utilization and launches, offset by branded price decreases and generic conversions. Branded list price cuts of Jan 2026 reduced segment revenue growth by about 4 points with no material profit effect, stated on the call.
- GLP‑1 revenue, stated on the call: about $14bn in Q4 FY2026 (+22%), about $15bn in Q1 FY2027 (+24%) and about $16bn in Q2 FY2027 (+26%, about $3bn of the $7.8bn group revenue increase). Filings give no GLP‑1 revenue figure; the 10-Q names GLP‑1 utilization as part of market growth.
- Outlook, stated on the call: FY2027 segment revenue +5% to +9% and profit +14% to +18%, against +5.5% to +9.5% profit growth guided in May 2026; long term profit target +5% to +8% a year.
- CVS Health, 24% of FY2026 group revenue, extended its distribution agreement through Jun 2032 (8-K Ex 99.1 of 4 Nov 2026), with the renewed term from 1 Oct 2026, stated on the call.
How drug distribution is changing and how competitors compare
- GLP‑1 drugs add revenue at low margin: Cencora reports that GLP‑1 sales carry lower gross margins; its former US Healthcare Solutions segment grew 5.4% to $78.3bn in the Sep 2026 quarter on specialty sales to health systems and GLP‑1 volume, offset by lower brand prices and lower sales to its large mail order customer.
- Pricing policy: the CMS bona fide service fee rule from 1 Jan 2026 requires wholesaler certifications (10-K); McKesson supports the Medicare GLP‑1 Bridge program launched in Jul 2026, stated on the call.
- Peers, Sep 2026 quarter: McKesson segment revenue +5.6% at a 1.14% adjusted margin; Cardinal Health Pharmaceutical and Specialty Solutions +5.7% at 1.25%; Cencora Pharmaceutical Distribution and Services +4.1% at 0.93%. CVS extended agreements with both McKesson and Cardinal Health to Jun 2032.
Table 2.1 Drug distribution segments against competitors ($m)
| Company and segment | Period | Filed detail | Revenue | Growth (%) | Margin (%) |
|---|---|---|---|---|---|
| McKesson North American Pharmaceutical | Sep 2026 quarter (Q2 FY2027) | adjusted profit $1.04bn, +22.2%; GLP‑1 about $16bn, stated on the call | 91,360 | +5.6 | 1.14 |
| Cencora Pharmaceutical Distribution and Services (revised) | Sep 2026 quarter (Q4 FY2026) | segment operating income $691m, +12.3%; FY2026 revenue $284.5bn | 74,242 | +4.1 | 0.93 |
| Cencora US Healthcare Solutions (former) | Sep 2026 quarter (Q4 FY2026) | segment operating income $998m, +22.0%, incl. OneOncology | 78,300 | +5.4 | 1.27 |
| Cardinal Health Pharmaceutical and Specialty Solutions | Sep 2026 quarter (Q1 FY2027) | segment profit $783m, +17%; FY2027 profit growth guidance 10% to 12% | 62,600 | +5.7 | 1.25 |
McKesson margin is adjusted segment operating profit (non GAAP); peers on their own segment basis. Cencora resegmented from 1 Oct 2026; the former segment is shown for reference.
3 Oncology & Multispecialty: Provider Networks and Specialty Acquisitions
- Revenue $15.0bn in Q2 FY2027, +24.4%; adjusted operating profit $427m, +7.6%, margin 2.85%; the prior year quarter held $51m of net gains on an investment sale. FY2026 revenue $48.4bn, +31%; adjusted profit $1.44bn.
- Growth sources (10-Q): specialty sales in provider solutions; Core Ventures (Florida Cancer Specialists, 70% for $2.5bn) has been consolidated since Jun 2025 and PRISM Vision (80% for $875m) since Apr 2025.
- Networks: US Oncology Network above 3,400 providers after adding more than 570 in FY2026; PRISM Vision above 350 providers with Spectrum Vision Partners (about $525m) from Nov 2026; Sarah Cannon Research Institute took part in research behind 43 of the 52 adult oncology drugs the FDA approved in 2025, stated on the call.
- New capital: Precision Medicine Group (about $2.25bn cash, closed 2 Nov 2026, in the segment from Q3 FY2027) and about 49% of Option Care Health for about $1.4bn (pending, equity method, share of results in other income, net).
- Outlook, stated on the call: FY2027 revenue +20% to +24% and profit +18% to +22%, up from +14.5% to +18.5% and +13.5% to +17.5% in May 2026.
How specialty and provider services are changing and how competitors compare
- Distributors buy provider networks: Cencora closed OneOncology in Feb 2026 (with a $1.1bn remeasurement gain on its prior stake), agreed to buy American Oncology Network (more than 350 providers in 21 states) and created a Specialty Pharmaceutical and Provider Services segment from 1 Oct 2026 with a mid teens long term operating income growth target.
- Peers, Sep 2026 quarter: Cencora specialty segment revenue $12.18bn, +15.5%, margin 3.77%, against McKesson Oncology & Multispecialty +24.4% at 2.85% adjusted; Cardinal Health does not split specialty revenue and reports Pharmaceutical and Specialty Solutions profit of $783m, +17.4%.
- Regulation: IRA Medicare Part B negotiated prices start in Jan 2028, stated on the call; McKesson's FY2026 10-K adds risk language on possible laws restricting certain healthcare ownership structures.
Table 3.1 Specialty and provider segments against competitors ($m)
| Company and segment | Period | Filed detail | Revenue | Growth (%) | Margin (%) |
|---|---|---|---|---|---|
| McKesson Oncology & Multispecialty | Sep 2026 quarter (Q2 FY2027) | adjusted profit $427m, +7.6%, after $51m of prior year net gains | 14,980 | +24.4 | 2.85 |
| Cencora Specialty Pharmaceutical and Provider Services (revised) | Sep 2026 quarter (Q4 FY2026) | segment operating income $459m, +37.5%; FY2026 revenue $45.4bn | 12,175 | +15.5 | 3.77 |
| Cardinal Health Pharmaceutical and Specialty Solutions | Sep 2026 quarter (Q1 FY2027) | specialty revenue not split; segment profit $783m, +17.4% | 62,600 | +5.7 | 1.25 |
McKesson margin is adjusted (non GAAP). Cardinal Health revenue and margin are for the combined segment.
Table 3.2 Acquisitions and investments in oncology and multispecialty
| Deal | Date | Consideration | Terms and accounting |
|---|---|---|---|
| PRISM Vision (80%) | 1 Apr 2025 | $875m | retina and ophthalmology practice management; $510m intangibles, $437m goodwill |
| Core Ventures (70%, Florida Cancer Specialists) | 2 Jun 2025 | $2.5bn | 30% redeemable NCI with a put every five years; $109m remeasurement charge in H1 FY2027 |
| Option Care Health (about 49%) | agreed 5 Oct 2026 | about $1.4bn | with CD&R (about 51%) at $32.05 per share, enterprise value about $5.8bn; equity method; close expected H1 calendar 2027; excluded from guidance |
| Precision Medicine Group | closed 2 Nov 2026 | about $2.25bn cash | clinical research and commercialization services; in O&M from Q3 FY2027; adjusted EPS accretion $0.10 to $0.20 in FY2027, stated on the call |
| Spectrum Vision Partners (controlling interest) | early Nov 2026 | about $525m | added to PRISM Vision; network above 350 providers |
4 Medical‑Surgical Solutions and the Wellverse Separation
- Revenue $3.10bn in Q2 FY2027, +5.1% (extended care +$91m, ambulatory +$49m); adjusted operating profit $225m, (9.6%), margin 7.27% against 8.45%, on ambulatory product mix; GAAP segment profit $164m. FY2026 revenue $11.51bn, +1%.
- Separation steps: Apollo funds bought about 13% for $1.25bn of convertible preferred equity on 1 Jun 2026; the segment raised $3.2bn of net secured term loan proceeds to repay an intercompany loan; the future standalone business is named Wellverse, with a phased transition from Jan 2027, stated on the call.
- Effect on group figures: McKesson still consolidates the segment; redeemable NCI rose to $2.56bn from $943m; H1 FY2027 carried a $282m net remeasurement charge and $114m of separation costs; group interest expense rose 42% in Q2.
- Size: Medical‑Surgical earned $11.78bn of TTM revenue, 2.8% of the group, and $1.03bn of FY2026 adjusted segment profit, 14.6% of the four segments.
- Outlook, stated on the call: FY2027 revenue +1% to +6%, profit (4%) to flat, against flat to +4% in May 2026. Former CFO Britt Vitalone advises on the separation.
How medical supply distribution is changing and how competitors compare
- Peers grew more slowly in the latest quarter: Henry Schein Global Medical +1.1% (internal growth 1.0%), Cardinal Health Global Medical Products and Distribution flat at $3.2bn with segment profit down 28% to $33m, against McKesson Medical‑Surgical +5.1%.
- Owens & Minor exit: Owens & Minor sold its Products & Healthcare Services distribution segment to Platinum Equity for $375m on 31 Dec 2025 and became Accendra Health, a home medical equipment company; its latest filed quarter (Jun 2026) shows revenue $613.2m, (10.1%), and is not like for like. Accendra received an NYSE notice on 27 Oct 2026 for market value and equity below $50m (8-K Item 3.01).
- Demand: McKesson cited lower physician office volumes and a lighter illness season for the (10%) adjusted profit change in the Dec 2025 quarter and ambulatory product mix for the (10%) change in the Sep 2026 quarter.
Table 4.1 Medical supply distribution against competitors ($m)
| Company and segment | Period | Filed detail | Revenue | Growth (%) | Margin (%) |
|---|---|---|---|---|---|
| McKesson Medical‑Surgical Solutions | Sep 2026 quarter (Q2 FY2027) | adjusted profit $225m, (9.6%); extended care +$91m, ambulatory +$49m revenue | 3,097 | +5.1 | 7.27 |
| Henry Schein Global Medical | quarter to 26 Sep 2026 | internal growth 1.0%; US Medical $1.11bn, +1.0%; no medical profit disclosed | 1,138 | +1.1 | n/a |
| Cardinal Health Global Medical Products and Distribution | Sep 2026 quarter (Q1 FY2027) | segment profit $33m against $46m | 3,200 | +0.0 | 1.03 |
| Accendra Health (formerly Owens & Minor), not like for like | Jun 2026 quarter (Q2 2026) | home medical equipment only after the Dec 2025 sale of distribution; adjusted EBITDA $60.1m against $96.6m | 613.2 | (10.1) | n/a |
McKesson margin is adjusted (non GAAP). Henry Schein discloses no profit for its medical business alone. Accendra Health latest is the Jun 2026 quarter; its Sep 2026 quarter was not filed by 5 Nov 2026.
Table 4.2 Medical‑Surgical separation timeline
| Date | Step |
|---|---|
| 8 May 2025 | Intention to separate the segment announced with Q4 FY2025 results |
| 1 Apr 2026 | McKesson Medical Surgical Top Holdings credit agreement: $750m Term Loan A due 2031, $250m Term Loan A due 2028 (SOFR plus 1.25%), $1.0bn secured revolver to 2031 |
| 1 Jun 2026 | Apollo funds buy about 13% through $1.25bn of convertible preferred equity; recorded as redeemable NCI, $1.238bn net financing inflow |
| 9 Jun 2026 | Amendment adds a $2.25bn senior secured Term Loan B due 2032 at SOFR plus 2.25%; $3.2bn of net term loan proceeds repay an intercompany loan |
| 5 Aug 2026 | Standalone business named Wellverse (8-K Ex 99.1) |
| Jan 2027 | Phased transition to stand alone expected to begin, stated on the Q1 FY2027 call |
| Open | Final split off or spin off needs a tax opinion, an SEC registration statement, approvals and Board approval (10-K Item 1A) |
5 Financial Analysis & Ratios
- Operating income TTM Q2 FY2027 $6.69bn, 1.60% of revenue, against 1.54% in FY2026; gross profit $15.37bn (3.67%), selling, distribution, general and administrative expenses $8.36bn.
- Net income attributable to McKesson TTM $4.70bn, diluted EPS $38.89; adjusted EPS (non GAAP) $42.64. H1 FY2027 net income carries $391m of redeemable NCI remeasurement charges ($282m for the Apollo stake, $109m for Core Ventures) and $114m of separation costs.
- Cash flow TTM: operating cash flow $7.50bn, capex $635m, free cash flow $6.87bn (1.64% of revenue), buybacks $6.78bn, dividends $400m. H1 FY2027 free cash flow $2.58bn against $1.12bn, as Q1 cash flow is seasonally low.
- Balance sheet at 30 Sep 2026: cash $6.53bn, debt $9.21bn incl. the $3.2bn Medical‑Surgical term loans, net debt $2.68bn; working capital ($7.71bn), with accounts payable of $67.8bn above inventory and receivables combined ($59.0bn); stockholders' deficit ($3.95bn) after cumulative buybacks.
- Capital returns: $3.42bn of buybacks in H1 FY2027, incl. the $2.25bn May 2026 ASR at $810.17, and $198m of dividends; $4.28bn of authorization left; quarterly dividend raised 15% to $0.94 in Jul 2026.
Table 5.1 Income statement, cash flow and balance sheet summary ($bn unless stated)
| Line item | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 | TTM Q2 FY2027 |
|---|---|---|---|---|---|---|
| Revenue | 264.0 | 276.7 | 309.0 | 359.1 | 403.4 | 418.8 |
| Gross profit | 13.1 | 12.4 | 12.8 | 13.3 | 14.6 | 15.4 |
| Selling, general and administrative | 10.5 | 7.8 | 8.7 | 8.5 | 8.1 | 8.4 |
| Operating income | 2.0 | 4.4 | 3.9 | 4.4 | 6.2 | 6.7 |
| Net income | 1.1 | 3.6 | 3.0 | 3.3 | 4.8 | 4.7 |
| Diluted EPS ($) | 7.23 | 25.03 | 22.39 | 25.72 | 38.38 | 38.89 |
| Operating cash flow | 4.4 | 5.2 | 4.3 | 6.1 | 6.2 | 7.5 |
| Capital expenditure | (0.5) | (0.6) | (0.7) | (0.9) | (0.7) | (0.6) |
| Free cash flow | 3.9 | 4.6 | 3.6 | 5.2 | 5.4 | 6.9 |
| Stock based compensation | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | n/a |
| Cash and investments | 3.5 | 4.7 | 4.6 | 5.7 | 4.0 | 6.5 |
| Total debt | 5.9 | 5.6 | 5.6 | 5.7 | 6.5 | 9.2 |
| Total equity | (2.3) | (1.9) | (2.0) | (2.1) | (2.2) | (4.0) |
Fiscal years end 31 March. TTM column: Q3 FY2026 to Q2 FY2027; balance sheet lines at 30 Sep 2026. Net income is attributable to McKesson. Total equity is McKesson stockholders' deficit, negative in every year, so ROE and debt to equity are not meaningful. Capex includes capitalized software. SBC is not shown in the quarterly cash flow statement.
Table 5.2 What changed, Q2 FY2027 against Q2 FY2026
| Metric | Q2 FY2026 | Q2 FY2027 | Change |
|---|---|---|---|
| Revenue ($bn) | 103.15 | 110.96 | 7.6% |
| Gross profit ($bn) | 3.54 | 3.96 | 11.7% |
| Operating income ($bn) | 1.41 | 1.60 | 14.0% |
| Net income ($bn) | 1.11 | 1.22 | 9.7% |
| Diluted EPS ($) | 8.92 | 10.44 | 17.0% |
| Operating cash flow ($bn) | 2.42 | 3.07 | 26.9% |
| Free cash flow ($bn) | 2.22 | 2.95 | 32.5% |
| Operating margin (%) | 1.4 | 1.4 | 0.1 pts |
| Net margin (%) | 1.1 | 1.1 | 0.0 pts |
Table 5.3 Ratio analysis
| Ratio | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 | TTM Q2 FY2027 |
|---|---|---|---|---|---|---|
| Growth and margins | ||||||
| Revenue growth (%) | n/a | 4.8 | 11.7 | 16.2 | 12.4 | n/a |
| Gross margin (%) | 5.0 | 4.5 | 4.2 | 3.7 | 3.6 | 3.7 |
| Operating margin (%) | 0.8 | 1.6 | 1.3 | 1.2 | 1.5 | 1.6 |
| Net margin (%) | 0.4 | 1.3 | 1.0 | 0.9 | 1.2 | 1.1 |
| FCF margin (%) | 1.5 | 1.7 | 1.2 | 1.5 | 1.3 | 1.6 |
| Cost and investment intensity | ||||||
| Capex (%) revenue | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 |
| Effective tax rate (%) | 33.0 | 19.5 | 16.6 | 20.1 | 17.8 | 18.0 |
| Returns | ||||||
| ROA (%) | 1.8 | 5.7 | 4.6 | 4.6 | 6.0 | 5.1 |
| Asset turnover (x) | 4.17 | 4.44 | 4.58 | 4.78 | 4.90 | 4.54 |
| Liquidity and leverage | ||||||
| Current ratio (x) | 0.95 | 0.92 | 0.92 | 0.90 | 0.85 | 0.90 |
| Net cash ($bn) | (2.3) | (0.9) | (1.0) | 0.0 | (2.6) | (2.7) |
| Efficiency and cash quality | ||||||
| Days sales outstanding | 26 | 26 | 26 | 26 | 25 | 27 |
| Inventory days | 27 | 27 | 26 | 24 | 23 | 26 |
| FCF to net income (x) | 3.50 | 1.29 | 1.21 | 1.59 | 1.14 | 1.46 |
| Shareholder returns (%) FCF | 97 | 85 | 92 | 67 | 95 | 104 |
ROE, ROIC and debt to equity are not meaningful because McKesson stockholders' equity is a deficit. ROA uses average total assets for FY2023 to FY2026. FY2022 net income carries a $1.51bn European remeasurement charge.
Table 5.4 Valuation snapshot at $1,100.40 per share, intraday 5 Nov 2026
| Measure | Value |
|---|---|
| Market cap ($bn) | 127.1 |
| Enterprise value (net debt at 30 Sep 2026) ($bn) | 129.7 |
| P/E on TTM GAAP EPS (x) | 28.3 |
| P/E on TTM adjusted EPS (x) | 25.8 |
| P/E on FY2027 adjusted EPS guidance midpoint (x) | 23.9 |
| EV/Sales TTM (x) | 0.3 |
| FCF yield on TTM FCF (%) | 5.4 |
| Dividend yield (%) | 0.3 |
Cost structure and profitability
- Cost of sales is 96.43% of Q2 FY2027 revenue; gross margin 3.57% against 3.43%, as Oncology & Multispecialty and Prescription Technology Solutions grew faster than drug distribution.
- Operating expenses $2.35bn in Q2, +10%, 2.12% of revenue, incl. $46m of Medical‑Surgical separation costs and restructuring under three programs (Corporate $230m to $310m through FY2028; RxTS $200m to $250m through FY2029; FY2025 enterprise program $650m to $700m through FY2028).
- Operating margin 1.45% in Q2 FY2027 against 1.36%; TTM 1.60%. Adjusted segment profit rose in three of four segments; Medical‑Surgical fell (10%).
- GAAP and adjusted EPS differ mainly by amortization, transaction costs incl. NCI remeasurement, LIFO, antitrust settlement gains, restructuring and litigation; McKesson guides only on adjusted EPS.
Table 5.5 Margins as % of revenue, last five quarters
| Line | Q2 FY2026 | Q3 FY2026 | Q4 FY2026 | Q1 FY2027 | Q2 FY2027 |
|---|---|---|---|---|---|
| Gross profit (% of revenue) | 3.43 | 3.47 | 4.20 | 3.50 | 3.57 |
| Operating expenses (% of revenue) | 2.07 | 1.95 | 1.97 | 2.25 | 2.12 |
| Operating income (% of revenue) | 1.36 | 1.53 | 2.23 | 1.25 | 1.45 |
| Net income (% of revenue) | 1.08 | 1.12 | 1.75 | 0.58 | 1.10 |
Table 5.6 Adjusted segment operating profit, last five quarters ($m, non GAAP)
| Segment | Q2 FY2026 | Q3 FY2026 | Q4 FY2026 | Q1 FY2027 | Q2 FY2027 | Q2 growth (%) | Q2 margin (%) |
|---|---|---|---|---|---|---|---|
| North American Pharmaceutical | 851 | 872 | 980 | 894 | 1,040 | 22.2 | 1.14 |
| Oncology & Multispecialty | 397 | 366 | 385 | 405 | 427 | 7.6 | 2.85 |
| Prescription Technology Solutions | 261 | 277 | 322 | 303 | 307 | 17.6 | 20.20 |
| Medical‑Surgical Solutions | 249 | 265 | 271 | 195 | 225 | (9.6) | 7.27 |
Company measure from the 8-K Ex 99.1 Schedule 3.
6 MD&A & Management Commentary
Q2 FY2027 results release, Form 10-Q and earnings call (4 Nov 2026)
- Q2 FY2027: revenue $111.0bn, +7.6%; gross profit $3.96bn, +12%, gross margin 3.57% against 3.43%; operating income $1.60bn, +14%; interest expense $105m, +42%, on the Medical‑Surgical term loans; tax rate 17.0%.
- EPS: GAAP $10.44, +17%, on 116.7m diluted shares, (6%); adjusted EPS (non GAAP) $11.68, +18%; adjusted operating profit $1.9bn, +13%.
- Segments (8-K Ex 99.1): North American Pharmaceutical adjusted profit +22%; Oncology & Multispecialty +8%, after $51m of prior year net gains; Prescription Technology Solutions revenue $1.52bn, +10%, adjusted profit $307m, +18%, on access solutions incl. prior authorization; Medical‑Surgical adjusted profit (10%) on ambulatory product mix.
- Cash and returns: Q2 operating cash flow $3.07bn, capex $123m, free cash flow $2.95bn; $3.6bn returned in H1; about $11.5bn of liquidity, stated on the call.
- Q1 FY2027 (5 Aug 2026): revenue $105.4bn, +8%; GAAP EPS $5.15 after the $293m remeasurement of the Apollo stake; adjusted EPS $9.93, +20%; Q1 free cash flow ($372m); dividend +15% to $0.94.
- Q4 FY2026 (7 May 2026): FY2026 revenue $403.4bn, +12%; adjusted EPS $39.11, +18%; long term adjusted EPS growth target 13% to 16% reaffirmed; buyback authorization raised by $5.0bn.
Table 6.1 Current outlook items, FY2027
| Item | Outlook | Source |
|---|---|---|
| FY2027 adjusted EPS (non GAAP) | $45.60 to $46.40, 17% to 19% growth on $39.11 | 8-K Ex 99.1, 4 Nov 2026 |
| FY2027 revenue and adjusted operating profit | revenue +6% to +10%; operating profit +12% to +16% | Q2 FY2027 call |
| Corporate, interest, NCI | corporate expenses at the high end of $580m to $640m; interest expense at the high end of $380m to $420m; NCI $290m to $320m | Q2 FY2027 call |
| Free cash flow and buybacks | free cash flow about $4.5bn to $4.9bn; about $5bn of buybacks, $3.4bn done in H1 | Q2 FY2027 call; 10-Q |
| Precision Medicine Group | adjusted EPS accretion $0.10 to $0.20 in FY2027, about $1.60 to $1.80 by year three | Q2 FY2027 call |
| Option Care Health | excluded from guidance; equity method, share of results in other income, net | Q2 FY2027 call; 8-K Ex 99.1, 6 Oct 2026; 10-Q |
| Long term targets | adjusted EPS +13% to +16% a year; operating profit: NAP +5% to +8%, O&M +13% to +16%, RxTS +10% to +13% | 8-K Ex 99.1, 7 May 2026 |
Management and CFO commentary
- CFO Kenny Cheung, Q2 FY2027 release (8-K Ex 99.1 of 4 Nov 2026): raised FY2027 adjusted EPS guidance to $45.60 to $46.40 from $44.20 to $45.00, citing strength across the business; Q2 operating cash flow $3.1bn, capex $123m, free cash flow $2.9bn; H1 free cash flow $2.6bn.
- CFO Kenny Cheung, Q1 FY2027 call (5 Aug 2026): outlook includes faster second half spending on growth and AI; tax rate narrowed to 18% to 19%; Q1 buybacks $2.5bn; Medical‑Surgical financing of $1bn Term Loan A, $2.25bn Term Loan B and an undrawn $1bn revolver.
- CFO Britt Vitalone, Q4 FY2026 call (7 May 2026): FY2027 free cash flow $4.5bn to $4.9bn with about $5bn of buybacks; Apollo's $1.25bn for about 13% values Medical‑Surgical at about $13bn; third party logistics about 55% of Prescription Technology Solutions revenue.
- CEO Brian Tyler, Q2 FY2027 release and call: portfolio additions Precision Medicine Group, Option Care Health and Spectrum Vision; Option Care described as a minority investment; Medicare GLP‑1 Bridge prior authorization volumes began to normalize after launch on 1 Jul 2026.
Table 6.2 Management statements in their own words
| Speaker | Date and source | Statement |
|---|---|---|
| Brian Tyler, Chair and CEO | 4 Nov 2026, Q2 FY2027 call | “Our strategy is working.” |
| Kenny Cheung, EVP and CFO | 5 Aug 2026, 8-K Ex 99.1 | “Our confidence in the business is supported by durability across the enterprise” |
| Brian Tyler, Chair and CEO | 6 Oct 2026, 8-K Ex 99.1 | “aligns with McKesson’s long‑term strategy” |
Table 6.3 Key disclosures in the Forms 10-K and 10-Q
| Item | Disclosure |
|---|---|
| 10-K FY2026, customers | Ten largest customers incl. GPOs 73% of FY2026 revenue and 43% of receivables; CVS Health 24% of revenue and 21% of receivables; next two 11% and 10%. |
| 10-K FY2026, regulation | Cites the IRA, OBBBA, Executive Order 14297 on most favored nation pricing, the CMS bona fide service fee rule from 1 Jan 2026, proposed 340B rebate models and state drug pricing laws. |
| 10-K FY2026, acquisitions | PRISM Vision 80% for $875m (Apr 2025) and Core Ventures 70% for $2.5bn (Jun 2025), with $2.3bn of intangibles and $752m of goodwill for Core Ventures. |
| 10-Q Q2 FY2027, revenue drivers | US sales of North American Pharmaceutical +$4.6bn from institutional providers and retail national accounts; market growth includes GLP‑1 utilization and launches, offset by branded price decreases and generic conversions. |
| 10-Q Q2 FY2027, NCI | H1 net income attributable to NCI $496m, incl. remeasurement charges of $282m for the Apollo stake and $109m for Core Ventures; redeemable NCI $2.56bn against $943m at 31 Mar 2026. |
| 10-Q Q2 FY2027, liquidity | $500m 1.30% notes repaid on 15 Aug 2026; cash $6.5bn, of which $2.1bn outside the US; $5bn revolver undrawn; debt to capital 152.9%. |
| 10-Q Q2 FY2027, restructuring | New Corporate programs of $230m to $310m through FY2028; RxTS program $200m to $250m through FY2029 ($79m in H1). |
| 10-Q Q2 FY2027, legal | Opioid liability $5.16bn ($600m current) after $496m of H1 payments; Thompson False Claims Act case dismissed 30 Sep 2026; putative cybersecurity class actions since Sep 2026 in N.D. Texas. |
Table 6.4 FY2027 outlook, all versions
| Measure | 7 May 2026 | 5 Aug 2026 | 4 Nov 2026 |
|---|---|---|---|
| Adjusted EPS ($, non GAAP) | 43.80 to 44.60 | 44.20 to 45.00 | 45.60 to 46.40 |
| Revenue growth (%) | n/a | 5 to 9 | 6 to 10 |
| Adjusted operating profit growth (%) | n/a | 9 to 13 | 12 to 16 |
| North American Pharmaceutical revenue growth (%) | 4 to 8 | n/a | 5 to 9 |
| North American Pharmaceutical profit growth (%) | 5.5 to 9.5 | high end of 5.5 to 9.5 | 14 to 18 |
| Oncology & Multispecialty revenue growth (%) | 14.5 to 18.5 | n/a | 20 to 24 |
| Oncology & Multispecialty profit growth (%) | 13.5 to 17.5 | n/a | 18 to 22 |
| Prescription Technology Solutions profit growth (%) | 11 to 15 | n/a | 11 to 15 |
| Medical‑Surgical Solutions profit growth (%) | 0 to 4 | n/a | (4) to 0 |
| Adjusted tax rate (%) | 17 to 19 | 18 to 19 | 18 to 19 |
| Diluted shares (m) | 116 to 118 | 115.5 to 117.5 | 115.5 to 117.5 |
| Free cash flow ($bn) | 4.5 to 4.9 | 4.5 to 4.9 | 4.5 to 4.9 |
Adjusted EPS from the 8-K Ex 99.1 releases; other items stated on the earnings calls. n/a: not stated in the sources read.
7 Sector & Competitor Analysis
- Sector: US drug wholesale distribution and specialty provider services; McKesson's 10-K names Cencora and Cardinal Health as its primary distribution competitors, and the three reported combined trailing revenue of about $1.01tn to Sep 2026.
- Peers, latest filed periods: revenue growth MCK +8.2% (TTM), Cencora +5.0% (FY2026 to Sep 2026) and Cardinal Health +5.5% (Sep 2026 quarter); TTM operating margin MCK 1.60%, Cencora 1.16%, Cardinal Health 1.05%; free cash flow margin MCK 1.64%, Cardinal Health 1.90%, Cencora 1.15%. Henry Schein, the comparator for Medical‑Surgical, runs a 31.59% gross margin and 5.16% operating margin.
- Valuation, intraday 5 Nov 2026: P/E on TTM GAAP EPS MCK 28.3x, Cencora 19.3x (net income incl. $1.14bn of other income), Cardinal Health 35.7x, Henry Schein 23.0x; on adjusted EPS guidance MCK 23.9x, Cardinal Health 21.6x, Cencora 17.9x. EV/Sales MCK 0.31x, Cardinal Health 0.27x, Cencora 0.22x.
- Litigation accruals at 30 Sep 2026: McKesson opioid liability $5.2bn; Cencora accrued litigation liability $3.7bn.
- Returns: ROE is not meaningful for McKesson and Cardinal Health, both with deficit equity.
Table 7.1 Peer comparison, TTM to Sep 2026
| Company | Revenue TTM ($bn) | Revenue growth (%) | Gross margin (%) | Operating margin (%) | Net margin (%) | FCF margin (%) | Net cash ($bn) | Market value ($bn) | EV/Sales (x) | P/E TTM (x) |
|---|---|---|---|---|---|---|---|---|---|---|
| MCK | 418.8 | 8.2 | 3.7 | 1.6 | 1.1 | 1.6 | (2.7) | 127 | 0.3 | 28.3 |
| COR | 337.4 | 5.0 | 4.1 | 1.2 | 1.0 | 1.2 | (6.4) | 67 | 0.2 | 19.3 |
| CAH | 257.8 | 5.5 | 3.9 | 1.1 | 0.7 | 1.9 | (3.6) | 65 | 0.3 | 35.7 |
| HSIC | 13.7 | 4.0 | 31.6 | 5.2 | 3.1 | 4.1 | (3.3) | 10 | 0.9 | 23.0 |
TTM to Sep 2026. Cencora is its FY2026 (year to 30 Sep 2026); its net income includes $1.14bn of other income. Cencora and Cardinal Health market values use diluted weighted shares (191.7m, 233m). ROE: Cencora 94.6%, Henry Schein 13.3%; McKesson and Cardinal Health n/m (deficit equity). Henry Schein is the comparator for Medical‑Surgical. Revenue growth: TTM against prior TTM for McKesson, FY2026 against FY2025 for Cencora, latest quarter year on year for Cardinal Health (Sep 2026 quarter) and Henry Schein (quarter to 26 Sep 2026). P/E is price over TTM diluted EPS. Prices intraday 5 Nov 2026.
8 Material Events & Contracts
- 14 Forms 8-K between 5 Nov 2025 and 4 Nov 2026: five results releases (Ex 99.1), three credit agreement filings (Ex 10.1), the CFO and strategy officer changes, the annual meeting vote results, the cybersecurity incident, the Q4 FY2026 results date notice and the Option Care Health release; no Form 8-K/A.
- Credit agreements: the Medical‑Surgical subsidiary borrowed $1.0bn of Term Loans A and a $2.25bn Term Loan B, with an undrawn $1.0bn revolver, all secured on its assets; McKesson replaced its $5.0bn of revolvers with one $5.0bn facility to Apr 2031 whose leverage covenant excludes Medical‑Surgical.
- Portfolio: Norway sale closed 30 Jan 2026, completing the exit from Europe; Option Care Health stake agreed 5 Oct 2026; Precision Medicine Group closed 2 Nov 2026; Spectrum Vision added to PRISM Vision in early Nov 2026.
- Cybersecurity: McKesson found an incident affecting its information systems on 25 Aug 2026 and reported it under Item 7.01 on 28 Aug 2026; the 10-Q of 4 Nov 2026 lists the putative class actions filed since Sep 2026.
Table 8.1 Forms 8-K filed between 5 Nov 2025 and 4 Nov 2026
| Date | Items | Event |
|---|---|---|
| 5 Nov 2025 | 2.02, 9.01 | Q2 FY2026 results: revenue $103.2bn (+10%), GAAP EPS $8.92, adjusted EPS $9.86 (+39%); FY2026 adjusted EPS guidance raised to $38.35 to $38.85. Ex 99.1. |
| 4 Feb 2026 | 2.02, 9.01 | Q3 FY2026 results: revenue $106.2bn (+11%), GAAP EPS $9.59, adjusted EPS $9.34 (+16%); guidance $38.80 to $39.20; Norway sale to NorgesGruppen closed 30 Jan 2026. Ex 99.1. |
| 5 Mar 2026 | 5.02, 9.01 | CFO Britt Vitalone to retire, last day as CFO 28 May 2026; Kenny Cheung (former Sysco CFO) CFO from 29 May 2026. Ex 99.1 release, Ex 10.1 advisor agreement with Vitalone. |
| 6 Mar 2026 | 7.01, 9.01 | Q4 FY2026 results date set for 7 May 2026; FY2026 outlook reaffirmed. Ex 99.1. |
| 6 Apr 2026 | 1.01, 2.03, 9.01 | Medical‑Surgical credit agreement of 1 Apr 2026: $1.0bn of Term Loans A and a $1.0bn secured revolver. Ex 10.1. |
| 28 Apr 2026 | 1.01, 1.02, 2.03, 9.01 | New $5.0bn unsecured revolver to Apr 2031 replaces the $4.0bn five year and $1.0bn 364 day facilities. Ex 10.1. |
| 7 May 2026 | 2.02, 9.01 | Q4 and FY2026 results: FY2026 revenue $403.4bn (+12%), GAAP EPS $38.38, adjusted EPS $39.11 (+18%); FY2027 adjusted EPS guidance $43.80 to $44.60; buyback authorization raised by $5.0bn; $2.25bn ASR. Ex 99.1. |
| 12 Jun 2026 | 1.01, 2.03, 9.01 | Medical‑Surgical credit agreement amended on 9 Jun 2026 to add a $2.25bn Term Loan B due 2032. Ex 10.1. |
| 1 Jul 2026 | 5.02, 7.01, 9.01 | Thomas Rodgers, EVP Chief Strategy and Business Development Officer, retires on 1 Aug 2026; Ramesh Srinivasan EVP Chief Strategy Officer from 1 Aug 2026. |
| 24 Jul 2026 | 5.07 | Annual meeting of 22 Jul 2026: 11 directors elected, Deloitte ratified, say on pay approved. |
| 5 Aug 2026 | 2.02, 9.01 | Q1 FY2027 results: revenue $105.4bn (+8%), GAAP EPS $5.15, adjusted EPS $9.93 (+20%); guidance $44.20 to $45.00; dividend +15% to $0.94; Apollo stake closed; business named Wellverse. Ex 99.1. |
| 28 Aug 2026 | 7.01, 9.01 | Cybersecurity incident found on 25 Aug 2026; investigation at an early stage; not determined to be material at filing. |
| 6 Oct 2026 | 7.01, 9.01 | Joint release with CD&R: about $1.4bn for about 49% of Option Care Health at $32.05 per share. Ex 99.1. |
| 4 Nov 2026 | 2.02, 9.01 | Q2 FY2027 results: revenue $111.0bn (+8%), GAAP EPS $10.44, adjusted EPS $11.68 (+18%); guidance $45.60 to $46.40; CVS agreement to Jun 2032; Precision Medicine Group closed 2 Nov 2026. Ex 99.1. |
Table 8.2 Material contracts and financing arrangements
| Contract | Terms |
|---|---|
| Medical‑Surgical credit agreement (Ex 10.1, 6 Apr and 12 Jun 2026) | Borrower McKesson Medical Surgical Top Holdings, JPMorgan Chase as agent: $750m Term Loan A due 2031, $250m Term Loan A due 2028 (SOFR plus 1.25%), $2.25bn Term Loan B due 2032 (SOFR plus 2.25%), $1.0bn secured revolver to 1 Apr 2031; secured by substantially all borrower assets; maximum net leverage and minimum interest coverage covenants. |
| Revolving credit facility (Ex 10.1, 28 Apr 2026) | $5.0bn unsecured to Apr 2031, Bank of America as agent; $4.5bn sublimit in Canadian dollars, sterling and euros; total debt to EBITDA at most 4.25x (4.75x after a cash acquisition of at least $500m) excluding Medical‑Surgical debt and EBITDA; SOFR plus 0.625% to 1.25%; undrawn at 30 Sep 2026. |
| Apollo convertible preferred equity | $1.25bn for about 13% of Medical‑Surgical, closed 1 Jun 2026; redeemable NCI remeasured to redemption value through NCI ($282m net in H1 FY2027). |
| CVS Health distribution agreement | Extended through Jun 2032 (8-K Ex 99.1 of 4 Nov 2026), renewed term from 1 Oct 2026, stated on the call; CVS was 24% of FY2026 revenue. |
| Option Care Health transaction | With CD&R at $32.05 per share, about 37% above the 5 Oct 2026 close; McKesson about $1.4bn for about 49%; framework for McKesson to acquire CD&R's interest later. |
| Opioid settlements | McKesson share of the national distributor settlement $7.9bn, payable through 2038, plus state and tribal settlements; liability $5.16bn at 30 Sep 2026. |
| CFO terms and advisor agreement (Item 5.02, Ex 10.1) | Kenny Cheung: $1.05m base salary, 125% target bonus, $3.5m sign on cash, $6.0m sign on RSUs, $3.45m PSUs and $2.3m RSUs. Britt Vitalone advisor from 2 Jul 2026 at $50,000 a month. |
9 Ownership, Voting Power & Annual Meeting
- One class of common stock, one vote per share, no controlling holder. The 2026 proxy lists BlackRock (7.9%) and Vanguard Capital Management (7.8%) above 5%; 17 directors and executive officers held 73,455 shares, under 1%. Shares outstanding fell from 117.08m (27 May 2026) to 115.46m (30 Oct 2026) on buybacks. Apollo's 13% interest sits in the Medical‑Surgical subsidiary.
- 2026 annual meeting (22 Jul 2026, virtual): all 11 directors elected with 91.8% (Brian S. Tyler) to 99.6% (Deborah Dunsire) of votes cast; Chair and CEO Brian Tyler 91.8%; say on pay 91.8%; Deloitte 90.6%; no shareholder proposals; Donald Knauss left the board.
- Insiders, 12 months to 5 Nov 2026: no open market purchases; open market sales of about $29.1m by 8 insiders, mostly under Rule 10b5‑1 plans. CEO Brian Tyler sold 21,855 shares for about $17.0m in Jun and Jul 2026 at $763 to $794. Other Forms 4 cover award vesting, tax withholding and director grants.
- Officers: Brian Tyler became Chair on 1 May 2026; CFO Britt Vitalone stepped down as CFO on 28 May 2026 ahead of retirement and Kenny Cheung, former Sysco CFO, took over on 29 May 2026; Chief Strategy Officer Thomas Rodgers retired on 1 Aug 2026, succeeded by Ramesh Srinivasan.
Table 9.1 Annual meeting vote results, 22 Jul 2026
| Proposal | For (m votes) | Against (m votes) | Abstain (m votes) | For as % of votes cast | Result |
|---|---|---|---|---|---|
| Elect Dominic J. Caruso | 93.2 | 1.3 | 0.2 | 98.6 | Elected |
| Elect Lynne M. Doughtie | 94.1 | 0.4 | 0.2 | 99.6 | Elected |
| Elect W. Roy Dunbar | 93.0 | 1.5 | 0.3 | 98.4 | Elected |
| Elect Deborah Dunsire, M.D. | 94.2 | 0.4 | 0.2 | 99.6 | Elected |
| Elect Julie L. Gerberding, M.D., M.P.H. | 94.0 | 0.5 | 0.2 | 99.5 | Elected |
| Elect James H. Hinton | 94.1 | 0.4 | 0.2 | 99.6 | Elected |
| Elect Bradley E. Lerman | 93.0 | 1.6 | 0.2 | 98.4 | Elected |
| Elect Maria N. Martinez | 88.5 | 6.0 | 0.2 | 93.7 | Elected |
| Elect Kevin M. Ozan | 91.8 | 2.7 | 0.2 | 97.2 | Elected |
| Elect Brian S. Tyler | 86.8 | 7.8 | 0.1 | 91.8 | Elected |
| Elect Kathleen Wilson‑Thompson | 94.1 | 0.4 | 0.2 | 99.5 | Elected |
| Ratify Deloitte as auditor for FY2027 | 95.1 | 9.9 | 0.2 | 90.6 | Ratified |
| Advisory vote on executive compensation | 86.6 | 7.7 | 0.4 | 91.8 | Approved |
Broker non votes 10.46m on each item except the auditor ratification. Source: Form 8-K Item 5.07 of 24 Jul 2026.
Table 9.2 Holders above 5% in the 2026 proxy statement
| Holder | Shares (m) | Share of class (%) | Source |
|---|---|---|---|
| BlackRock, Inc. | 9.21 | 7.9 | 2026 proxy (Schedule 13G/A of Apr 14 2025) |
| Vanguard Capital Management LLC | 9.18 | 7.8 | 2026 proxy (Schedule 13G of Apr 30 2026) |
Table 9.3 Open market insider sales, 12 months to 5 Nov 2026 (Forms 4)
| Insider | Role | Date | Type | Shares and price | Value ($m) |
|---|---|---|---|---|---|
| Brian Tyler | Chair and CEO | 9 Jun, 17 Jun, 7 Jul 2026 | Sale (Rule 10b5‑1) | 4,929 at $763; 8,463 at $775.13; 8,463 at $793.56 | about 17.0 |
| Michele Lau | Chief Legal Officer | Feb, 2 Mar, 26 May 2026 | Sale | 303 at $933.39; 2,725 at $990; 3,550 at $761.09 | about 5.7 |
| Thomas Rodgers | former Chief Strategy Officer | Jan, May, Jun 2026 | Sale | several sales | about 2.6 |
| LeAnn Smith | Chief Human Resources Officer | Feb, Jun 2026 | Sale | several sales | about 1.5 |
| Napoleon Rutledge | Controller and CAO | Nov 2025, Feb, Jun, Sep 2026 | Sale (Rule 10b5‑1) | several sales | 0.80 |
| Francisco Fraga | CIO and CTO | 15 Oct 2026 | Sale | 800 at $995.80 | 0.80 |
| Maria Martinez | Director | Feb 2026 | Sale | 349 at $939.87 | 0.33 |
| Bradley Lerman | Director | Aug 2026 | Sale | 301 at $892.33 | 0.27 |
Total open market sales about $29.1m by 8 insiders; no open market purchases. Values computed from Form 4 prices.
10 Risk Factors
- Item 1A of the FY2026 Form 10-K holds 37 risk factors, as in FY2025 (9,015 words against 8,522): 1 added on the Medical‑Surgical separation, 1 removed (opioid distribution costs, folded into the healthcare laws factor) and 7 reworded (one in the heading only). The Forms 10-Q for Q1 and Q2 FY2027 state no material changes; no risk factor text yet covers the Aug 2026 cybersecurity incident.
Table 10.1 Risk factors and legal matters with filed figures
| Risk | Disclosure and change |
|---|---|
| Opioid litigation | Liability $5.16bn at 30 Sep 2026 ($600m current) against $5.69bn at 31 Mar 2026, after $496m of H1 payments; the Fourth Circuit reversed the Cabell County and Huntington judgment for McKesson on 28 Oct 2025 and remanded; a Canadian provincial class trial is set for 22 Feb 2028. |
| Cybersecurity incident | Found on 25 Aug 2026 (8-K Item 7.01 of 28 Aug 2026) and not judged material at filing; putative class actions since Sep 2026 in N.D. Texas (O'Connor v. McKesson) allege exfiltration of health and personal data; the 10-Q gives no cost estimate. |
| Customer concentration | CVS Health 24% and the ten largest customers 73% of FY2026 revenue; the CVS agreement runs to Jun 2032, and Cardinal Health signed a CVS letter of intent to the same date. |
| Drug pricing policy | Most favored nation pricing (Executive Order 14297), the CMS bona fide service fee rule, a possible 340B rebate model from Jan 2027 and IRA Part B negotiation from Jan 2028; management expects no material effect from the 340B model, stated on the call. |
| Medical‑Surgical separation | New factor: completion depends on a tax free opinion, an SEC registration statement, approvals and Board approval; risks of IRS challenge, transition services and dissynergies. |
| Leverage and NCI | Debt $9.21bn and redeemable NCI $2.56bn at 30 Sep 2026; Q2 interest expense +42%. |
| AI | AI appears in 7 factors with 24 mentions against 6 factors and 14 mentions a year earlier, incl. a new paragraph on internal AI use. |
How risk factors changed
- Comparison: 10-K FY2026 (year ended 31 Mar 2026) filed 7 May 2026 acc 0000927653-26-000069 against 10-K FY2025 (year ended 31 Mar 2025) filed 8 May 2025 acc 0000927653-25-000036.
- Factor count unchanged at 37; total words rise 5.8% from 8,522 to 9,015.
- Planned separation of Medical‑Surgical Solutions is the only new factor; the segment is named in no FY2025 factor.
- Opioid distribution costs no longer have a standalone factor; the healthcare laws factor now names state taxes and assessments on opioid distribution.
- AI appears in 7 factors with 24 mentions against 6 factors and 14 mentions a year earlier, incl. a new paragraph on internal AI use.
- Healthcare reform text shrank from 630 to 242 words as IRA and 340B detail moved to Item 1; the OBBBA and Executive Order 14297 are named for the first time.
Table 10.2 Size of the risk factor section
| Measure | 10-K FY2025 | 10-K FY2026 |
|---|---|---|
| Risk factors (count) | 37 | 37 |
| Words in Item 1A | 8,522 | 9,015 |
Table 10.3 Risk factors added, removed and materially reworded
| Change | Risk factor | What changed |
|---|---|---|
| Added | Planned Medical‑Surgical separation may not complete or deliver benefits | New factor on the intended split off or spin off of Medical‑Surgical Solutions into NewCo, conditional on a tax free opinion, an SEC registration statement, government approvals, NewCo capital structure and Board approval, with risks of IRS challenge, transition services and dissynergies. |
| Removed | Increased costs to distribute controlled substances such as opioids | Stand alone opioid distribution cost factor dropped; its content was folded into the reworded healthcare laws factor, which now names state taxes and assessments on opioid distribution. |
| Reworded | Extensive, frequently changing laws; opioid distribution costs | Heading now adds 'frequently changing' and opioid distribution costs; body adds an evolving regulatory framework for controlled substances, state taxes or assessments on prescription opioid distribution, and possible limits on strategic options. |
| Reworded | Privacy, cybersecurity, data protection and AI laws and guidance | Adds 'guidance' to the heading and 'rapidly developing and potentially divergent AI guidance'; extends liability to failures by third party providers and lists investigations and legal proceedings. |
| Reworded | Anti bribery and anti corruption laws | Heading adds 'and expose us to risks'; body unchanged. |
| Reworded | Technology products or services might not perform as intended | New paragraph on internal use of AI: outputs that are false, biased or inconsistent, performance drift, vendor updates, third party AI tools and investments that may not yield benefits; body grows from 175 to 361 words. |
| Reworded | Acquisitions, strategic transactions and investments may not perform | Heading adds that investments in businesses may not perform as expected; body adds failure of acquired businesses or investments to perform and potential laws restricting certain healthcare ownership structures. |
| Reworded | Strategic growth objectives may not be achieved | Adds organic and inorganic investing, the shift from specialty to multispecialty, new offerings, keeping pace with competitors and the technology landscape, and regulatory limits on healthcare ownership structures; removes the sentence on AI becoming obsolete. |
| Reworded | Healthcare reform, pricing and reimbursement changes | Body cut from 630 to 242 words: detailed ACA, IRA and 340B text moved to Item 1, replaced by a list naming the IRA, the OBBBA, Executive Order 14297, CMS rules on bona fide service fees and rebate models, 340B litigation and state drug pricing laws. |
Table 10.4 Risk factor updates in quarterly reports since the annual filing
| Filing | Change disclosed |
|---|---|
| 10-Q Jun 2026 quarter (Q1 FY2027) filed 5 Aug 2026 | Part II Item 1A states no material changes to the FY2026 10-K risk factors other than factual updates in the report. |
| 10-Q Sep 2026 quarter (Q2 FY2027) filed 4 Nov 2026 | Part II Item 1A states no material changes to the FY2026 10-K risk factors other than factual updates in the report. |
11 Stock Price, Scenarios & Sensitivity
- MCK traded at $1,100.40 intraday on 5 Nov 2026, the day after Q2 results, against a 4 Nov close of $1,069.44; +36% on the Oct 2025 close of $811.34 and +408% on Nov 2021; 52 week range $723.19 (May 2026) to $1,117.84 (intraday 5 Nov 2026); market value $127.1bn on 115.46m shares.
- Valuation: 28.3x TTM GAAP EPS of $38.89; 25.8x TTM adjusted EPS of $42.64; 23.9x the FY2027 adjusted EPS guidance midpoint of $46.00; EV/Sales 0.31x; FCF yield 5.4%; dividend yield 0.34%. Price to book is not meaningful (deficit).
- Scenario model: consolidated revenue grows from TTM Q2 FY2027 for three years to FY2030 at a GAAP operating margin (1.60% TTM); interest and NCI $700m a year; tax 19%; share count falls 4% to 10% on buybacks. Medical‑Surgical stays consolidated in the model; its separation would remove about 2.8% of revenue.
- Price chart: monthly closes for five years, with Nov 2026 at the intraday price of 5 Nov 2026, followed by the best, base and worst case paths at the end of each of the next three years.
Critical factors and core assumptions
Table 11.1 Critical factors behind the best case
| Factor | Current value | Best case requires | Evidence in filings and calls |
|---|---|---|---|
| GLP‑1 and specialty volume | North American Pharmaceutical +6%; GLP‑1 about $16bn, +26%, stated on the call | segment revenue growth at or above 9% with profit growth of 14% to 18% | 10-Q Q2 FY2027 MD&A; Q2 FY2027 call |
| Oncology & Multispecialty | revenue $15.0bn, +24%; adjusted margin 2.85% | profit growth of 18% to 22%; Precision Medicine accretion of $1.60 to $1.80 by year three | 8-K Ex 99.1 of 4 Nov 2026; Q2 FY2027 call |
| Prescription Technology Solutions | adjusted margin 20.2% in Q2 FY2027 | profit growth of 11% to 15% a year | 8-K Ex 99.1 Schedule 3 |
| Medical‑Surgical separation | Apollo 13% for $1.25bn; $3.2bn of term loans; transition from Jan 2027 | tax free split off or spin off with limited dissynergies | 10-K Item 1A; 8-K Ex 99.1 of 5 Aug 2026 |
| Capital deployment | $3.4bn of buybacks in H1; $4.28bn authorization; $2.25bn and $1.4bn deals | about $5bn a year of buybacks; acquisitions above cost of capital | 10-Q Q2 FY2027 liquidity |
| Policy and customers | CVS 24% of revenue, renewed to Jun 2032; more than 95% of branded fee for service | no fee compression from MFN, 340B or IRA changes | 10-K Items 1, 1A and 7 |
- Base: TTM Q2 FY2027 revenue $418.8bn and GAAP operating margin 1.60%; FY2027 guidance revenue +6% to +10% and adjusted EPS $45.60 to $46.40.
- Best case: +10% revenue CAGR at the top of the FY2027 range on drug volume and specialty acquisitions; 2.0% operating margin; 30x P/E; 10% fewer shares.
- Base case: +7% revenue CAGR near the FY2027 midpoint; 1.7% operating margin; 24x P/E, near the multiple on the FY2027 guidance midpoint; 8% fewer shares.
- Worst case: +3% revenue CAGR with pricing policy pressure on fees, loss or repricing of a large customer and higher litigation or cyber costs; 1.4% margin; 17x P/E; 4% fewer shares.
- All cases: interest expense and NCI of $700m a year before tax; tax rate 19%; opioid payments through 2038 funded from operating cash flow.
Scenarios, three years forward
Table 11.2 Scenario analysis, TTM Q2 FY2027 to FY2030
| Measure | Worst case | Base case | Best case |
|---|---|---|---|
| Revenue CAGR, 3 years (%) | 3.0 | 7.0 | 10.0 |
| Revenue, FY2030 ($bn) | 457.6 | 513.0 | 557.4 |
| Operating margin, FY2030 (%) | 1.4 | 1.7 | 2.0 |
| Net income, FY2030 ($bn) | 4.6 | 6.5 | 8.5 |
| EPS, FY2030 ($) | 41.70 | 61.17 | 81.44 |
| Exit P/E (x) | 17.0 | 24.0 | 30.0 |
| Implied price ($) | 709 | 1,468 | 2,443 |
| Change against $1,100.40 (%) | (36) | 33 | 122 |
| Implied annual return (%) | (13.6) | 10.1 | 30.5 |
Operating margin is GAAP operating income over revenue; EPS is GAAP. Implied annual return excludes dividends.
Sensitivity analysis
Table 11.3 Sensitivity of implied price to revenue CAGR and operating margin at 24x P/E
| Revenue CAGR \ Operating margin | 1% | 2% | 3% |
|---|---|---|---|
| 3% | $709 | $1,547 | $2,384 |
| 5% | $759 | $1,646 | $2,534 |
| 7% | $811 | $1,750 | $2,689 |
| 9% | $864 | $1,857 | $2,850 |
| 11% | $920 | $1,968 | $3,016 |
Cells show implied share price in year 3. Price intraday 5 Nov 2026 $1,100.40. Blue cells sit above it, red cells below. Margin columns step in whole percentage points; TTM GAAP operating margin is 1.60% and scenario margins run from 1.4% to 2.0%.
Table 11.4 Sensitivity of implied price to exit P/E and operating margin at 7% revenue CAGR
| Exit P/E \ Operating margin | 1% | 2% | 3% |
|---|---|---|---|
| 17x | $574 | $1,239 | $1,904 |
| 20x | $676 | $1,458 | $2,241 |
| 24x | $811 | $1,750 | $2,689 |
| 27x | $912 | $1,968 | $3,025 |
| 30x | $1,014 | $2,187 | $3,361 |
Cells show implied share price in year 3. Price intraday 5 Nov 2026 $1,100.40. Blue cells sit above it, red cells below. Margin columns step in whole percentage points; TTM GAAP operating margin is 1.60% and scenario margins run from 1.4% to 2.0%.
Disclaimer
This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 5 November 2026.
Sources
All company figures are read from SEC filings retrieved through the sec-api.io MCP server. Figures marked as stated on the call, incl. GLP‑1 revenue and the segment outlook, come from the company's earnings calls.
Table A.1 Filings used, with accession numbers
| Form | Period | Filed | Accession number |
|---|---|---|---|
| 10-Q | Q2 FY2027 | 4 Nov 2026 | 0000927653-26-000281 |
| 8-K (2.02) Ex 99.1 | Q2 FY2027 | 4 Nov 2026 | 0000927653-26-000279 |
| 10-Q | Q1 FY2027 | 5 Aug 2026 | 0000927653-26-000234 |
| 8-K (2.02) Ex 99.1 | Q1 FY2027 | 5 Aug 2026 | 0000927653-26-000232 |
| 10-K | FY2026 | 7 May 2026 | 0000927653-26-000069 |
| 8-K (2.02) Ex 99.1 | Q4 FY2026 | 7 May 2026 | 0000927653-26-000066 |
| 10-Q | Q3 FY2026 | 4 Feb 2026 | 0000927653-26-000017 |
| 8-K (2.02) Ex 99.1 | Q3 FY2026 | 4 Feb 2026 | 0000927653-26-000015 |
| 8-K (2.02) Ex 99.1 | Q2 FY2026 | 5 Nov 2025 | 0000927653-25-000138 |
| 10-Q | Q1 FY2026 | 6 Aug 2025 | 0000927653-25-000107 |
| 8-K (2.02) Ex 99.1 | Q1 FY2026 | 6 Aug 2025 | 0000927653-25-000105 |
| 10-K | FY2025 | 8 May 2025 | 0000927653-25-000036 |
| 8-K (2.02) Ex 99.1 | Q4 FY2025 | 8 May 2025 | 0000927653-25-000034 |
| 10-Q | Q3 FY2025 | 5 Feb 2025 | 0000927653-25-000014 |
| 10-K | FY2024 | 7 May 2024 | 0000927653-24-000035 |
| 10-K | FY2023 | 8 May 2023 | 0000927653-23-000038 |
| DEF 14A | 2026 annual meeting | 12 Jun 2026 | 0000927653-26-000169 |
| 8-K (5.07) | 2026 annual meeting | 24 Jul 2026 | 0000927653-26-000215 |
| 8-K (7.01) | Cybersecurity incident | 28 Aug 2026 | 0000927653-26-000247 |
| 8-K (7.01) | Option Care Health | 6 Oct 2026 | 0000927653-26-000253 |
| 8-K Ex 99.1 (Cencora) | FY2026 | 4 Nov 2026 | 0001140859-26-000038 |
| 8-K Ex 99.1 (Cardinal Health) | Q1 FY2027 | 5 Nov 2026 | 0000721371-26-000042 |
| 8-K Ex 99.1 (Cardinal Health) | FY2026 | 11 Aug 2026 | 0000721371-26-000037 |
| 8-K Ex 99.1 (Cardinal Health, CVS LOI) | Oct 2026 | 1 Oct 2026 | 0000721371-26-000041 |
Table A.2 Peer and sector filings used
| Company | Form | Filed | Accession number |
|---|---|---|---|
| Accendra Health | 8-K | 10 Aug 2026 | 0001104659-26-092999 |
| Accendra Health | 8-K | 30 Oct 2026 | 0001104659-26-120716 |
| Cardinal Health | 8-K | 1 Oct 2026 | 0000721371-26-000041 |
| Cardinal Health | 8-K | 5 Nov 2026 | 0000721371-26-000042 |
| Cencora | 8-K | 4 Nov 2026 | 0001140859-26-000040 |
| Cencora | 8-K | 4 Nov 2026 | 0001140859-26-000038 |
| Henry Schein | 8-K | 3 Nov 2026 | 0001000228-26-000059 |
| Henry Schein | 10-Q | 3 Nov 2026 | 0001000228-26-000062 |
Table B.1 Exhibits to Forms 8-K filed in the last twelve months
| Filed | Exhibit | Document | Content |
|---|---|---|---|
| 5 Nov 2025 | Ex 99.1 | Q2 FY2026 results (Sep 2025 quarter) | Revenue $103.2bn, up 10%; diluted EPS $8.92 against $1.87; adjusted EPS $9.86, up 39%; FY2026 adjusted EPS guidance raised by $0.30 to $38.35 to $38.85, after a $0.80 raise at the Sep 2025 Investor Day |
| 4 Feb 2026 | Ex 99.1 | Q3 FY2026 results (Dec 2025 quarter) | Revenue $106.2bn, up 11%; diluted EPS $9.59, up $2.64; adjusted EPS $9.34, up 16%; FY2026 adjusted EPS guidance raised and narrowed to $38.80 to $39.20 from $38.35 to $38.85 |
| 5 Mar 2026 | Ex 99.1 | CFO transition: Britt Vitalone to retire, Kenny Cheung named CFO | CFO Britt Vitalone retires after 20 years at McKesson, more than eight as CFO; last day as CFO 28 May 2026; Kenny Cheung, previously CFO of Sysco, named EVP and CFO effective 29 May 2026 |
| 5 Mar 2026 | Ex 10.1 | Advisor Agreement with Britt Vitalone | Advisor Agreement effective 2 Jul 2026; Vitalone acts as an independent contractor; Monthly advisory fee of $50,000 plus reasonable expenses, with no other compensation or benefits |
| 6 Mar 2026 | Ex 99.1 | Q4 FY2026 earnings date and conference participation | Q4 FY2026 results scheduled for 7 May 2026 after market close; Company reaffirmed the FY2026 outlook issued on 4 Feb 2026 (adjusted EPS $38.80 to $39.20) |
| 6 Apr 2026 | Ex 10.1 | Medical‑Surgical senior secured credit agreement | McKesson Medical‑Surgical Top Holdings signed a credit agreement on 1 Apr 2026 with JPMorgan Chase as agent; Facilities: $750m Term Loan A1 due 2031, $250m Term Loan A2 due 2028 and a $1.0bn secured revolver maturing 1 Apr 2031 |
| 28 Apr 2026 | Ex 10.1 | New $5.0bn revolving credit facility | New $5.0bn unsecured revolver signed 24 Apr 2026 with Bank of America as agent, maturing Apr 2031; Replaces a $1.0bn 364 day facility and a $4.0bn five year facility; no borrowings were outstanding under them |
| 7 May 2026 | Ex 99.1 | Q4 and full year FY2026 results, FY2027 guidance | FY2026 revenue $403.4bn, up 12%; diluted EPS $38.38; adjusted EPS $39.11, up 18%; free cash flow $5.4bn; Q4 revenue $96.3bn, up 6%; adjusted EPS $11.69, up 16% |
| 12 Jun 2026 | Ex 10.1 | Medical‑Surgical $2.25bn Term Loan B amendment | Amendment of 9 Jun 2026 adds a $2.25bn senior secured Term Loan B due 2032 to the Medical‑Surgical credit agreement; Priced at Adjusted Term SOFR plus 2.25% (or Base Rate plus 1.25%) |
| 1 Jul 2026 | none | Chief Strategy Officer change | Thomas Rodgers, EVP Chief Strategy and Business Development Officer, gave notice of retirement on 29 Jun 2026, last day 1 Aug 2026; Ramesh Srinivasan appointed EVP Chief Strategy Officer effective 1 Aug 2026 |
| 24 Jul 2026 | none | 2026 annual meeting vote results | Annual meeting held 22 Jul 2026; all 11 director nominees elected; Brian Tyler received 86.8m votes for and 7.8m against; Maria Martinez 88.5m for and 6.0m against |
| 5 Aug 2026 | Ex 99.1 | Q1 FY2027 results (Jun 2026 quarter) | Revenue $105.4bn, up 8%; diluted EPS $5.15, down $1.10, after a $293m redemption value adjustment on Medical‑Surgical noncontrolling interests; adjusted EPS $9.93, up 20%; FY2027 adjusted EPS guidance raised to $44.20 to $45.00 from $43.80 to $44.60 |
| 28 Aug 2026 | none | Cybersecurity incident disclosure | McKesson discovered a cybersecurity incident affecting its information systems on 25 Aug 2026; Investigation at an early stage; company had not determined the incident to be material as of filing |
| 6 Oct 2026 | Ex 99.1 | CD&R and McKesson agree to acquire Option Care Health | CD&R and McKesson to acquire Option Care Health for $32.05 per share, enterprise value about $5.8bn; McKesson invests about $1.4bn for an approximately 49% minority stake; CD&R holds about 51% |
| 4 Nov 2026 | Ex 99.1 | Q2 FY2027 results (Sep 2026 quarter) | Revenue $111.0bn, up 8%; diluted EPS $10.44, up $1.52; adjusted EPS $11.68, up 18%; FY2027 adjusted EPS guidance raised to $45.60 to $46.40 (17% to 19% growth) from $44.20 to $45.00 |
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