Executive Summary
McKesson’s QQ2 2025 results show robust top-line growth and a continuation of its role as a high-volume healthcare distributor, with revenue rising to USD 93.65 billion and a YoY increase of 21.3% (QoQ +18.1%). However, the quarter delivered a materially compressed bottom line, with net income of USD 241 million and an EPS of USD 1.87, reflecting operating deleveraging and ongoing cost pressures. Gross margin stood at ~3.47% (gross profit USD 3.25 billion on USD 93.65 billion revenue), signaling persistent margin headwinds in a highly competitive, low-margin distribution environment. Operating income was USD 578 million (operating margin ~0.62%), and EBITDA was USD 775 million, underscoring the challenge of converting volume growth into meaningful profitability in the near term.
Cash generation remained a bright spot. Operating cash flow reached USD 2.10 billion for the period, with free cash flow of USD 1.882 billion. The company returned capital to shareholders through a large buyback program (USD 1.492 billion) and paid USD 80 million in dividends, while ending the period with USD 2.511 billion in cash. Net debt remained negative (net debt of USD -4.71 billion) amid substantial cash balances and ongoing net cash provided by operating activities, though the balance sheet shows total liabilities exceeding assets (total liabilities USD 75.071 billion vs. total assets USD 72.429 billion) and negative stockholders’ equity (USD -3.018 billion). These dynamics imply strong liquidity on a cash basis but raise questions about balance-sheet leverage and equity strength under stress scenarios.
Looking ahead, management commentary (where available) will be critical to gauge expectations for margin stabilization, the contribution of RxTS (Prescription Technology Solutions) and international growth, and the pace of working capital optimization. Investors should monitor: (1) trajectory of operating margins and cost controls, (2) RxTS and Life Sciences initiatives’ margin and revenue contribution, (3) working capital efficiency given low current/quick ratios, and (4) capital allocation decisions including the balance between buybacks and strategic investments.
Key Performance Indicators
QoQ: -43.83% | YoY:-35.63%
QoQ: -73.66% | YoY:-63.70%
QoQ: -73.48% | YoY:-62.22%
Key Insights
Revenue: USD 93.65B; YoY = +21.29%, QoQ = +18.12%
Gross Profit: USD 3.248B; Gross Margin = 3.47%; YoY = +12.08%, QoQ = +3.05%
Operating Income: USD 0.578B; Operating Margin = 0.62%; YoY = -35.63%, QoQ = -43.83%
Net Income: USD 0.241B; Net Margin = 0.26%; YoY = -63.70%, QoQ = -73.66%
EPS (diluted): USD 1.86; EPS (basic): USD 1.87; YoY = -62.22%, QoQ = -73.48%
EBITDA: USD 0.775B; EBITDA Margin = 0.83%
Cash Flow: Operating Cash Flow USD 2.10B; Free Cash Flow USD 1.882B; Capex USD -0.218B; CFO/ Reve...
Financial Highlights
Revenue: USD 93.65B; YoY = +21.29%, QoQ = +18.12%
Gross Profit: USD 3.248B; Gross Margin = 3.47%; YoY = +12.08%, QoQ = +3.05%
Operating Income: USD 0.578B; Operating Margin = 0.62%; YoY = -35.63%, QoQ = -43.83%
Net Income: USD 0.241B; Net Margin = 0.26%; YoY = -63.70%, QoQ = -73.66%
EPS (diluted): USD 1.86; EPS (basic): USD 1.87; YoY = -62.22%, QoQ = -73.48%
EBITDA: USD 0.775B; EBITDA Margin = 0.83%
Cash Flow: Operating Cash Flow USD 2.10B; Free Cash Flow USD 1.882B; Capex USD -0.218B; CFO/ Revenue ~2.24%
Liquidity/Balance Sheet: Cash and cash equivalents USD 2.511B; Total assets USD 72.429B; Total liabilities USD 75.071B; Stockholders’ equity USD -3.018B; Current ratio 0.908; Quick ratio 0.496; Cash ratio 0.0427
Capital Allocation: Common stock issued USD 32M; Common stock repurchased USD -1.492B; Dividends paid USD -80M; Net cash from financing activities USD -1.599B; Net change in cash USD +0.207B
Valuation/Multiples: P/E ~ 65.4x; P/S ~ 0.673x; P/B ~ -20.9x (negative book value per share); EV/EBITDA ~ not explicitly stated; Dividend yield ~ 0.127%
Efficiency: DSO ~ 24.28 days; DIO ~ 24.04 days; DPO ~ 53.02 days; CCC ~ -4.69 days
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
93.65B |
21.29% |
18.12% |
| Gross Profit |
3.25B |
12.08% |
3.05% |
| Operating Income |
578.00M |
-35.63% |
-43.83% |
| Net Income |
241.00M |
-63.70% |
-73.66% |
| EPS |
1.87 |
-62.22% |
-73.48% |
Key Financial Ratios
operatingProfitMargin
0.8%
operatingCashFlowPerShare
$16.32
freeCashFlowPerShare
$15.26
dividendPayoutRatio
33.2%
Management Commentary
Management transcript not provided in the data set for QQ2 2025. No direct quotes or thematic highlights could be extracted. If a full earnings call transcript is supplied, grammar-check and thematic grouping by strategy, operations, and market conditions can be added here with context.
Transcript unavailable for QQ2 2025; no management quotes are accessible in the provided data.
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Transcript unavailable for QQ2 2025; no management quotes are accessible in the provided data.
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Forward Guidance
No explicit forward guidance is available in the provided data. Given the topline strength but continued margin compression, the near-term outlook could hinge on: (1) continued growth in RxTS and international distribution, (2) further optimization of working capital to improve cash conversion and liquidity metrics, (3) cost containment measures to support operating margins, and (4) capital-allocation decisions (buybacks vs. investments in value-added solutions). In a market characterized by regulated pricing pressures and competitive intensity in healthcare distribution, investors should monitor management comments on margin trajectory, technology enablement in RxTS, and steps to rebalance the balance sheet toward stronger equity support over time.