Paragraph 1: McKesson reported Q1 FY2025 revenue of $79.28 billion with a gross profit of $3.152 billion, yielding a gross margin of 3.98%. Operating income was $1.029 billion (operating margin ~1.30%), and net income was $0.915 billion (net margin ~1.15%). Earnings per share stood at $7.05 (diluted $7.00) on an average of roughly 129.8–130.7 million shares. EBITDA totaled $1.328 billion (approx. 1.68% of revenue). These metrics reflect a large, diversified healthcare distribution franchise with stable top-line growth but ongoing margin compression against a backdrop of cost of revenue dynamics and investments in capabilities.
Paragraph 2: The quarter exhibited significant working capital movement and cash flow headwinds. Cash flow from operations was negative at about $(1.38) billion, driven by a substantial change in working capital, notably increases in accounts receivable and, especially, inventory, offset by other working capital movements. Free cash flow was negative at about $(1.547) billion after capex of $(0.167) billion. Despite solid revenue growth and healthy gross profit in absolute terms, the cash conversion cycle remained negative, highlighting working capital sensitivity in a capital-intensive distribution model.
Paragraph 3: The balance sheet shows total assets of approximately $71.67 billion against total liabilities of roughly $73.05 billion, with stockholders’ equity reported as negative $(1.76) billion. Liquidity indicators show a cash balance of $2.30 billion and relatively tight short-term liquidity metrics (current ratio ~0.93, quick ratio ~0.47). Total debt stands around $7.40 billion with net debt ~$(5.09) billion, implying meaningful leverage given the equity position. Management commentary (where available) and company commentary are not included in the provided transcript data, so this analysis emphasizes drivers evident from the reported numbers and industry context. Investors should monitor working capital management, cash generation potential, and ongoing portfolio optimization across US Pharmaceutical, International Medical-Surgical, and RxTS segments to assess longer-term cash flow resilience.