Exchange: NYSE | Sector: Healthcare | Industry: Medical Distribution
Q1 2026
Published: Aug 6, 2025
Earnings Highlights
Revenue of $97.83B up 23.4% year-over-year
EPS of $6.25 decreased by 10.9% from previous year
Gross margin of 3.4%
Net income of 784.00M
"We delivered record consolidated revenues of $97.8 billion, an increase of 23% over the prior year. Adjusted operating profit increased 9% to $1.4 billion. Three of our segments delivered double-digit growth in adjusted operating profit." - Brian S. Tyler
McKesson Corporation (MCK) QQ1 2026 Earnings Analysis: Record Revenue, Strategic Acquisitions, and Portfolio Actions in Healthcare Distribution
Executive Summary
McKesson reported a robust start to fiscal 2026, delivering record consolidated revenues of $97.8 billion, up 23% year over year, and adjusted operating profit of $1.4 billion, up 9%. Three of its four segments posted double-digit adjusted operating profit growth, underpinning management’s decision to raise full-year EPS guidance to $37.10-$37.90. The quarter featured strong growth in U.S. Pharmaceutical, led by GLP-1 prescriptions and the onboarding of a strategic customer, along with meaningful contributions from the acquisitions of PRISM Vision and Core Ventures in the oncology and multispecialty platforms. Pharmacy technology services (RxTS) also posted double-digit revenue and profit gains, aided by higher third-party logistics volumes and prior authorization programs.
Management framed the quarter as a foundation for durable, long-range growth, supported by strategic portfolio actions (PRISM Vision and Core Ventures) and a disciplined capital deployment program (debt issuance, share repurchases, and a dividend increase). The company also signaled ongoing portfolio optimization, including the planned separation of the Medical-Surgical segment and the exit of the Norway operation (held-for-sale accounting), which is expected to contribute modestly to EPS in fiscal 2026 while preserving long-term value creation. Near-term execution remains focused on automation, scale efficiencies, and expanding high-growth platforms (oncology, biopharma services, and RxTS) to drive operating leverage and cash flow.
Overall, the quarter demonstrates McKesson’s resilience and strategic repositioning to accelerate growth in high-value healthcare services while managing portfolio changes and policy dynamics. Investors should monitor: (1) the trajectory of RxTS volumes and GLP-1 programs, (2) integration progress and revenue/operating profit contribution from PRISM Vision and Core Ventures, (3) the held-for-sale impact from Norway, (4) the evolving regulatory/policy landscape (e.g., MSN discussions) and (5) the company’s ongoing capital return and alignment with free cash flow targets.
Key Performance Indicators
Revenue
97.83B
QoQ: 7.71% | YoY:23.39%
Gross Profit
3.28B
3.35% margin
QoQ: -9.89% | YoY:10.93%
Operating Income
1.04B
QoQ: -34.88% | YoY:-2.36%
Net Income
784.00M
QoQ: -37.78% | YoY:-14.32%
EPS
6.28
QoQ: -37.57% | YoY:-10.92%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $97.8B, up 23% YoY; Gross profit: $3.279B; Gross margin: 3.35%; Operating income: $1.036B; Operating margin: 1.06%; Net income: $0.784B; Net margin: 0.80%; EPS (diluted): $6.25-$6.28; Weighted-average shares: ~125.0M.
Summary of key QQ1 2026 metrics and segment drivers (YoY and QoQ context where available):
- Revenue: $97.8B, up 23% YoY; Gross profit: $3.279B; Gross margin: 3.35%; Operating income: $1.036B; Operating margin: 1.06%; Net income: $0.784B; Net margin: 0.80%; EPS (diluted): $6.25-$6.28; Weighted-average shares: ~125.0M.
- U.S. Pharmaceutical: Revenue $90.0B, +25% YoY; GLP-1 revenue $12.1B, +38% YoY (sequential +11% QoQ).
- RxTS (Prescription Technology Solutions): Revenue $1.4B, +16% YoY; Operating profit $269M, +21% YoY; driven by prior authorization programs and access/affordability solutions.
- Medical-Surgical Solutions: Revenue $2.7B, +2% YoY; Operating profit $244M, +22% YoY, led by cost optimization and efficiency gains.
- International: Revenue $3.7B, +1% YoY; Operating profit $99M, -3% YoY (divestitures affected Canada-based Rexall/Well.ca).
- Cash flow: Operating cash flow negative at $(0.918)B; free cash flow $(1.029)B; capex $0.111B; acquisitions $3.435B; cash ended period $2.683B; net debt $7.25B; total debt $9.93B.
- Balance sheet: Total assets $81.311B; total liabilities $82.174B; stockholders’ equity negative (approx. $(1.97)B) reflecting accounting classifications and held-for-sale effects.
- Capital deployment: $2B bond issuance; $581M in share repurchases; $90M in dividends; Norway held-for-sale accounting to begin in FY2026 Q2, with ~($0.20) impact to diluted EPS included in guidance.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
97.83B
23.39%
7.71%
Gross Profit
3.28B
10.93%
-9.89%
Operating Income
1.04B
-2.36%
-34.88%
Net Income
784.00M
-14.32%
-37.78%
EPS
6.28
-10.92%
-37.57%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways grouped by theme, with relevant quotes:
- Performance and guidance: McKesson reported “record consolidated revenues of $97.8 billion, an increase of 23% over the prior year†and “adjusted operating profit increased 9% to $1.4 billion.†This momentum underpinned an increase in the full-year EPS outlook to $37.10-$37.90. (Brian S. Tyler)
- Strategic portfolio actions and growth platforms: The company highlighted the strategic acquisitions of PRISM Vision (retina/ophthalmology) and Core Ventures (MSO/administrative services) which management stated “will contribute approximately 6% to the fiscal 2026 operating profit growth in the U.S. Pharmaceutical segment.†(Brian S. Tyler; Britt J. Vitalone)
- Oncology and biopharma services emphasis:
We delivered record consolidated revenues of $97.8 billion, an increase of 23% over the prior year. Adjusted operating profit increased 9% to $1.4 billion. Three of our segments delivered double-digit growth in adjusted operating profit.
— Brian S. Tyler
We raised the full year guidance to $37.10 to $37.90 from a previous range of $36.90 to $37.70.
— Brian S. Tyler
Forward Guidance
McKesson’s forward guidance reflects continued growth across its four segments with Opex leverage from automation and scale, and the Company expects revenue growth of 11%-15% and operating profit growth of 9%-13% for fiscal 2026. In the U.S. Pharmaceutical segment, revenues are forecast to rise 12%-16%, with operating profit at the high end of the 12%-16% growth range, aided by GLP-1 volumes and acquisitions. RxTS is expected to grow 8%-12% in revenue and 9%-13% in operating profit, supported by prior authorization programs and increased 3PL volumes. Medical-Surgical Solutions revenue and operating profit are expected to rise 2%-6%, and International revenues are expected to be flat to +2% with 3%-7% operating profit growth. The Norway sale is expected to contribute approximately $0.20 to EPS on a held-for-sale basis in 2026, and free cash flow is guided to be $4.4B-$4.8B for the year. Investors should monitor execution of PRISM Vision/Core Ventures integration, the Norway held-for-sale process, GLP-1 program risk, payer dynamics, and the pace of automation-enabled margin expansion as the main catalysts and risks to the outlook.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
MCK Focus
3.35%
N/A
N/A
N/A
CAH
3.64%
1.09%
-12.70%
16.14%
HSIC
31.60%
5.52%
3.32%
19.30%
PDCO
20.30%
1.90%
1.44%
42.23%
OMI
20.00%
0.00%
-4.38%
-6.98%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
McKesson enters fiscal 2026 with strong top-line momentum and a clear strategy to monetize high-growth platforms (oncology, multispecialty, and RxTS). The combination of acquisitions (PRISM Vision, Core Ventures) and ongoing portfolio optimization (Norway held-for-sale, potential Medical-Surgical spin-off) could unlock significant value over the medium term. Management’s guidance reflects disciplined capital deployment, with revenue growth of 11%-15% and operating profit growth of 9%-13%, and annual free cash flow guidance of $4.4B-$4.8B. The dividend increase (+15%) and a target to repurchase ~$2.5B of shares in fiscal 2026 signal confidence in cash-generative capacity and capital return discipline.
Key risk factors include margin pressure from ongoing mix shifts, integration risk of recent acquisitions, and policy/healthcare reform dynamics that could alter community-based care economics. Investors should monitor the pace of integration in PRISM Vision and Core Ventures, the Norway held-for-sale impact (approx. $0.20 EPS), RxTS volume stability, GLP-1 program trends, and the durability of automation-driven cost savings. Overall, the stock’s upside rests on execution in high-growth platforms, meaningful accretion from acquisitions, and continued strength in capital deployment while efficiently navigating regulatory and macro headwinds.
Key Investment Factors
Growth Potential
Significant upside from oncology and biopharma services platforms (U.S. Oncology Network expansion to ~3,300 providers across 700 sites after Core Ventures and Florida Cancer Specialists integration), PRISM Vision ( retina/ophthalmology platform) and continued GLP-1/intensified specialty distribution growth. RxTS growth remains a structural driver due to continued demand for access and affordability solutions, including prior authorization for GLP-1 therapies and expanding 3PL volumes.
Profitability Risk
Execution risk from integrating PRISM Vision and Core Ventures; macro policy shifts (MSN/Medicaid considerations) potentially altering community-care economics; held-for-sale impact from Norway; reliance on GLP-1 program momentum and payer/beneficiary dynamics; potential lumpiness in RxTS 3PL volumes; elevated leverage from debt issued to finance acquisitions.
Financial Position
Solid liquidity with $2.68B cash; sizable total debt ($9.93B) and net debt of $7.25B post-transaction financing; near-term negative free cash flow due to acquisitions and financing activities; long-term cash flow generation expected to improve as automation and integration deliver operating leverage. The company also announced a 15% dividend increase and ~2.5B share repurchase program for fiscal 2026.
SWOT Analysis
Strengths
Scale and breadth of McKesson’s distribution network across U.S. and Canada, plus diversified services platform (US Pharma, International, Medical-Surgical, RxTS).
Strong growth momentum in high-value segments: GLP-1 driven pharmaceuticals, oncology/multispecialty services, and RxTS access/adherence solutions.
Strategic acquisitions (PRISM Vision, Core Ventures) expanding U.S. Oncology Network and multispecialty capabilities, with integration underway.
Investments in automation and cold chain capabilities driving productivity, safety, and throughput (e.g., Olive Branch center with cobots, up to 90% automation).
Market-leading Health Mart network and recognized customer relationships through community pharmacies.
Weaknesses
Low reported gross margin (3.35%) and constrained operating margin (~1.06%) for the quarter, suggesting margin compression due to mix and scale challenges.
Negative net stockholders’ equity on the balance sheet in the reported data, indicating potential accounting/portfolio effects and the heavy reliance on held-for-sale classifications.
Lumpy RxTS 3PL volumes and dependence on payer-driven programs could introduce revenue volatility quarter-to-quarter.
Opportunities
Expansion of the U.S. Oncology Network and MSO platforms to broaden distribution, services, and data insights; potential cross-platform synergies across retina and oncology IT and provider networks.
Biosimilars and biosimilar adoption across Part B and retina channels can provide durable earnings upside.
Continued automation-enabled operating leverage and supply-chain enhancements to improve margins and ROI on warehousing/distribution assets.
Strategic portfolio optimization (separation of Medical-Surgical, Norway exit) could unlock value and improve capital allocation efficiency.
Threats
Policy and regulatory risk in the U.S. (MSN, Medicaid reform) with potential impact on community-based care economics and payer mix.
Tariffs and cost pressures in the pharmaceutical supply chain; generic pricing dynamics and competition in biosimilars.
Execution risk and integration costs related to PRISM Vision/Core Ventures; potential to shift focus from core operations during integration.
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