Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• McKesson Corp (MCK, Financial) reported a 16% increase in full-year consolidated revenues, reaching a record $359 billion.
• Adjusted earnings per diluted share grew by 20%, surpassing long-term growth targets.
• The company returned $3.5 billion of cash to shareholders, demonstrating strong cash flow management.
• Strategic acquisitions in oncology and other specialties, such as PRISM Vision and Core Ventures, are expected to accelerate growth.
• The Prescription Technology Solutions segment experienced double-digit growth in adjusted operating profit, driven by strong demand for access and affordability solutions.

Negative Points

• The divestiture of Canadian businesses, including Rexall and Well.ca, resulted in lower contributions from the International segment.
• Operating expenses decreased by 10% due to divestitures and cost optimization, which may indicate potential downsizing or restructuring.
• The Medical Surgical segment experienced softer volumes in the primary care market, impacting growth.
• The company faces a dynamic market environment with uncertainties in policies and macroeconomic conditions.
• Free cash flow guidance for fiscal 2026 is lower than the previous year, reflecting potential cash outflows for acquisitions.

Q & A Highlights

Q: Can you help us understand the potential impact of Medicare Part B MFN on McKesson's core distribution and specialty clinics business? A: Brian Tyler, CEO: Currently, nothing has been officially announced, and any changes would likely face legal challenges. Community-based care is crucial for accessible, high-quality, and low-cost care, especially in oncology. We believe community-based care will continue to be fairly compensated. On the distribution side, McKesson expects to be paid fair value for its services.

Q: How are tariffs expected to impact McKesson's business, particularly in fiscal '26? A: Brian Tyler, CEO: We are closely monitoring the tariff landscape and have incorporated current policies into our guidance. Our sourcing strategy is diversified, and we have flexibility in pricing to mitigate tariff impacts. Britt Vitalone, CFO, added that the impact is not expected to be material for fiscal '26.

Q: With the separation of MedSurg, is there increased urgency to invest in biopharma services? A: Brian Tyler, CEO: The urgency to invest prudently against our strategy remains unchanged. We focus on financial discipline and strategic alignment. Opportunities are pursued when they align with our strategy and financial goals.

Q: What factors contribute to the increased long-term growth guidance for the US Pharmaceutical segment? A: Brian Tyler, CEO: The increase reflects stable prescription utilization, strategic customer onboarding, and a differentiated growth platform in oncology. Britt Vitalone, CFO, noted that the segment's growth is driven by strategic acquisitions and operational efficiencies.

Q: Can you elaborate on the trends in SG&A and gross profit for the quarter? A: Britt Vitalone, CFO: The decline in SG&A is primarily due to divestitures in the Canadian business. The gross profit trend reflects a mix of divestitures and operational leverage, contributing to strong adjusted operating profit.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.