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Mckesson Corp. (MCK)
NYSE:MCK
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McKesson
(NYSE:MCK)
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Rating:74Outperform
Price Target:
$1,043.00
▲(10.58% Upside)
Action:ReiteratedDate:03/06/26
The score is driven by strong fundamentals and cash generation plus a notably upbeat earnings call with raised FY26 guidance and solid segment momentum. Offsetting factors are balance-sheet leverage/volatility and only moderate valuation support, while technicals indicate a constructive longer-term trend but near-term consolidation.
Positive Factors
Robust free cash flow generation
Consistently strong free cash flow provides durable capacity to fund debt service, buybacks, and strategic investments. That cash conversion underpins financial flexibility, supports the $2B repurchase plan, and enables continued capital allocation even if operating margins remain thin.
Scale and diversified specialty growth
Rapid oncology and steady RxTS growth reflect durable structural advantages: broad distribution scale, specialty capabilities, and value-add tech/services. Diversified segment momentum reduces reliance on commoditized wholesale flows and supports higher-margin, sticky customer relationships over the medium term.
Active capital return and portfolio focus
Committed buybacks plus portfolio actions (divestitures and targeted separation of medical-surgical) indicate disciplined capital allocation and strategic sharpening. Reducing non-core exposure and returning cash can raise ROIC and concentrate management on higher-growth, higher-margin businesses long term.
Negative Factors
High leverage and volatile equity history
Elevated leverage and prior negative equity constrain balance-sheet flexibility and increase refinancing, covenant, and rating risks. Even with strong FCF, a large debt load makes the company more sensitive to cyclical swings and limits optionality for large, non-accretive investments.
Structurally thin distribution margins
A low-margin wholesale model means small cost or pricing pressures materially affect earnings. The medical-surgical profit decline highlights exposure to volume cycles and reimbursement pressures, making operating leverage limited and earnings more vulnerable to adverse demand or cost shifts.
Strategic uncertainty in GLP-1 channels and volatility
Key growth from GLP-1 distribution faces structural ambiguity around channel shifts and launch dynamics. That uncertainty undermines revenue predictability and program economics, increasing execution risk for specialty distribution and prior-authorization businesses over the medium term.
McKesson (MCK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$115.54B
Dividend Yield0.37%
Average Volume (3M)812.01K
Price to Earnings (P/E)21.3
Beta (1Y)0.30
Revenue Growth17.23%
EPS Growth66.17%
CountryUS
Employees44,000
SectorHealthcare
Sector Strength45
IndustryMedical - Distribution
Share Statistics
EPS (TTM)9.34
Shares Outstanding122,487,460
10 Day Avg. Volume699,965
30 Day Avg. Volume812,006
Financial Highlights & Ratios
PEG Ratio1.77
Price to Book (P/B)-41.34
Price to Sales (P/S)0.24
P/FCF Ratio16.41
Enterprise Value/Market Cap1.06
Enterprise Value/Revenue0.31
Enterprise Value/Gross Profit9.08
Enterprise Value/Ebitda18.85
Forecast
1Y Price Target
$991.22Price Target Upside5.09% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
EPS Forecast (FY)39.02
Revenue Forecast (FY)$408.58B
McKesson Business Overview & Revenue Model
Company DescriptionMcKesson Corporation provides healthcare services in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, International, Medical-Surgical Solutions, and Prescription Technology Solutions (RxTS). The U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs and other healthcare-related products. This segment also provides practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices; and consulting, outsourcing, technological, and other services, as well as sells financial, operational, and clinical solutions to pharmacies. The International segment offers distribution and services to wholesale, institutional, and retail customers in 13 European countries and Canada. The Medical-Surgical Solutions segment provides medical-surgical supply distribution, logistics, and other services to healthcare providers. The RxTS segment serves biopharma and life sciences partners and patients to address medication challenges for patients throughout their journeys; connects pharmacies, providers, payers, and biopharma companies to deliver innovative access and adherence solutions; and provides third-party logistics and wholesale distribution support solutions. McKesson Corporation was founded in 1833 and is headquartered in Irving, Texas.
How the Company Makes MoneyMcKesson generates revenue primarily through the distribution of pharmaceuticals and medical supplies. The company's key revenue streams include the wholesale distribution of branded and generic pharmaceuticals to pharmacies, hospitals, and other healthcare providers, which constitutes a significant portion of its total revenue. Additionally, McKesson provides integrated healthcare management solutions, generating revenue from software services and consulting. The company benefits from long-term contracts with large healthcare systems and partnerships with pharmaceutical manufacturers, enhancing its pricing power and operational efficiency. Furthermore, McKesson's participation in specialty pharmacy services and value-based care initiatives diversifies its income sources and supports its overall growth strategy.
McKesson Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows how revenue is distributed across various business segments, indicating which areas are growing or declining and where the company is focusing its efforts.
Shows how revenue is distributed across various business segments, indicating which areas are growing or declining and where the company is focusing its efforts.
Data provided by:
The Fly
The FlyMcKesson Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call presents a broadly positive operational and financial picture: strong double-digit top-line and EPS growth, raised full-year guidance, robust segment performance (notably oncology, specialty distribution and RxTS), solid cash generation, active buybacks, and successful acquisition integrations. Challenges are relatively contained: medical-surgical profitability pressure, quarter-to-quarter variability driven by seasonality/launch timing, and some uncertainty around GLP-1 channel evolution and near-term technology investment costs. Overall, the positives (growth, margin expansion, cash flow, strategic progress) materially outweigh the noted headwinds.Q3-2026 Updates
Positive Updates
Record Quarterly Revenue and Strong EPS
Consolidated revenues increased 11% year-over-year to $106.2 billion. Third quarter diluted EPS increased 16% to $9.34, driven by operational performance and acquisitions.
Raised Full-Year Guidance
Full-year adjusted EPS guidance raised to $38.80–$39.20 (17–19% YoY growth). Company also set revenue growth guidance of 12–16% and operating profit growth guidance of 13–17% for fiscal 2026.
Oncology & Multispecialty: Rapid Growth and Accretion from Acquisitions
Oncology and multispecialty revenues grew 37% year-over-year to $13.0 billion; operating profit rose 57% to $366 million. Acquisitions (Prism and Core Ventures) contributed ~13% to Q3 segment revenue growth and are expected to contribute ~30–34% to fiscal 2026 segment operating profit growth.
North American Pharmaceutical Distribution Momentum
North American Pharmaceutical revenues were $88.3 billion, up 9% YoY, supported by higher prescription volumes, specialty distribution strength, and health system volumes. Segment operating profit increased 6% to $872 million.
Substantial GLP-1 Distribution Growth
GLP-1 distribution revenues were $14.0 billion in the quarter, up $3.0 billion (26% YoY) with sequential growth of 7%.
Prescription Technology Solutions (RxTS) Performance
RxTS revenues increased 9% to $1.5 billion and operating profit rose 18% to $277 million, driven by demand for access, affordability, and prior authorization services and new program additions (50 new programs across 43 brands).
Profitability, Efficiency and Cash Generation
Gross profit increased 10% to $3.7 billion; operating profit rose 13% to $1.7 billion. Operating expense improvement of 138 basis points as a percentage of gross profit. Q3 free cash flow was $1.1 billion; trailing twelve months free cash flow was $9.6 billion. Ended quarter with $3.0 billion in cash and returned $781 million to shareholders (including $680 million in repurchases).
Balance Sheet Strength and Capital Return Plan
Company plans ~ $2.0 billion in share repurchases for fiscal 2026, expects free cash flow of $4.4–$4.8 billion, and maintains an investment-grade balance sheet. Return on invested capital improved by ~1,900 basis points since fiscal 2020, now exceeding 30%.
Progress on Portfolio Actions and Separation
Completed divestiture of Norway (final exit from Europe) and achieved transition service agreements for the medical-surgical separation. Tracking toward an IPO of the medical-surgical business by H2 calendar 2027 (subject to market/regulatory conditions).
Technology & Automation Wins
AI and automation initiatives improved productivity (each FTE supporting ~120 more patients in annual verification season), DSCSA AI chat tool prevented 75% of inquiries from escalating, and Canadian contact-center pilots approaching ~100% service accuracy.
Negative Updates
Medical-Surgical Segment Pressure
Medical-surgical revenues were $3.0 billion (up 1% YoY) but operating profit declined 10% to $265 million, attributed to lower physician office volumes and a milder illness season.
Quarterly and Program Variability
Management emphasized that results (especially in RxTS and GLP-1 distribution) can vary quarter-to-quarter due to utilization trends, launch timing, program lifecycle shifts, seasonal illness variability, and supply chain dynamics—introducing execution risk to quarters and potentially to FY27.
Uncertainty Around GLP-1 Channel Dynamics
While GLP-1 distribution grew strongly, management noted uncertainty about how oral GLP-1 launches and cash-pay channel shifts will evolve (net new users vs. share shifts), making future utilization and prior-authorization trends less predictable.
Incremental Technology Investment and Near-Term Costs
Planned incremental technology investments expected to add ~ $0.05 of cost in fiscal Q4 versus prior year; corporate expenses rose year-over-year and include ongoing technology infrastructure spending ($620–$650 million expected for year).
Guidance Range Variability and Below-the-Line Items
Some guidance ranges (e.g., North American pharmaceutical revenue/operating profit) remain wide and include line-item variances such as interest expense guidance ($215–$235 million) and noncontrolling interest ($230–$250 million), creating some forecast dispersion.
Company Guidance
Management raised and narrowed fiscal 2026 guidance to adjusted EPS of $38.80–$39.20 (up 17–19% y/y), revenue growth of 12–16%, and operating profit growth of 13–17%. Segment outlooks: North American Pharmaceutical revenue +10–14% and operating profit +8–12%; Oncology & Multispecialty revenue +29–33% and operating profit +51–55% (with Prism Vision and Core Ventures expected to contribute ~30–34% of the segment’s operating profit growth); Prescription Technology Solutions revenue +9–13% and operating profit +14–18%. Corporate expenses are guided to $620–$650M (including $15M YTD pretax gains), interest expense $215–$235M, income attributable to noncontrolling interest $230–$250M, and an effective tax rate of ~19%. Cash flow and capital priorities include free cash flow of ~$4.4–$4.8B for FY26, ~ $2B of planned share repurchases, and weighted average diluted shares of ~124M; management also noted an incremental Q4 technology investment cost of about $0.05 per share versus the prior year.McKesson Financial Statement Overview
Summary
Strong operating and free-cash-flow generation (notably improved TTM FCF) supports durability and capital returns, but the balance sheet is a key limiter due to sizable leverage and historically negative/volatile equity despite scale and steady post-2021 earnings recovery.Income Statement
Top-line growth has been consistently positive across the annual periods and remains positive in TTM (Trailing-Twelve-Months), indicating resilient demand and scale. Profitability is steady but structurally thin (low gross and net margins typical for distribution), with margins below earlier highs (e.g., 2023 vs. more recent periods). Earnings recovered materially from the 2021 loss and have remained solid since, but the overall profile is still sensitive to small margin moves given the low spread business model.78
Positive
Balance Sheet
Leverage is the key constraint: total debt remains sizable, and equity is negative in multiple annual periods (2021–2025 annual), which weakens balance-sheet flexibility and can amplify risk during downturns. While the latest TTM (Trailing-Twelve-Months) shows positive equity, the sharp swing versus recent annual figures suggests the capital structure is volatile. Overall assets have grown, but the equity position and debt load keep the balance sheet on the weaker end relative to the strong operating scale.38
Negative
Cash Flow
Cash generation is a major strength: operating cash flow and free cash flow are robust, with a very strong step-up in TTM (Trailing-Twelve-Months) free cash flow and healthy conversion of earnings into free cash flow. Free cash flow has been positive in every period shown and generally tracks well versus net income, supporting debt service capacity and shareholder returns. The main watch item is year-to-year variability (including a decline in 2024), but the most recent trajectory is meaningfully improved.88
Very Positive
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 397.96B | 359.05B | 308.95B | 276.71B | 263.97B | 238.23B |
| Gross Profit | 13.43B | 12.48B | 12.20B | 11.87B | 12.65B | 11.58B |
| EBITDA | 6.47B | 5.25B | 4.67B | 5.74B | 3.11B | -3.60B |
| Net Income | 4.34B | 3.29B | 3.00B | 3.56B | 1.11B | -4.54B |
Balance Sheet | ||||||
| Total Assets | 84.19B | 75.14B | 67.44B | 62.32B | 63.30B | 65.02B |
| Cash, Cash Equivalents and Short-Term Investments | 2.96B | 5.69B | 4.58B | 4.68B | 3.53B | 6.28B |
| Total Debt | 8.62B | 7.39B | 7.39B | 7.29B | 7.54B | 9.40B |
| Total Liabilities | 84.29B | 76.83B | 69.04B | 63.81B | 65.09B | 63.57B |
| Stockholders Equity | -1.30B | -2.07B | -1.97B | -1.86B | -2.27B | -21.00M |
Cash Flow | ||||||
| Free Cash Flow | 10.10B | 5.23B | 3.63B | 4.60B | 3.90B | 3.90B |
| Operating Cash Flow | 10.48B | 6.08B | 4.31B | 5.16B | 4.43B | 4.54B |
| Investing Cash Flow | -4.08B | -733.00M | -1.07B | -542.00M | -89.00M | -415.00M |
| Financing Cash Flow | -4.67B | -3.96B | -3.34B | -4.37B | -6.32B | -1.69B |
McKesson Technical Analysis
Positive
943.25
Price Trends
893.59
Positive
861.29
Positive
787.85
Positive
Market Momentum
10.82
Positive
53.17
Neutral
38.02
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCK, the sentiment is Positive. The current price of 943.25 is below the 20-day moving average (MA) of 952.61, above the 50-day MA of 893.59, and above the 200-day MA of 787.85, indicating a neutral trend. The MACD of 10.82 indicates Positive momentum. The RSI at 53.17 is Neutral, neither overbought nor oversold. The STOCH value of 38.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MCK.
McKesson Risk Analysis
McKesson disclosed 38 risk factors in its most recent earnings report. McKesson reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
McKesson Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $115.54B | 21.30 | -245.27% | 0.37% | 17.23% | 66.17% | |
73 Outperform | $51.20B | 25.74 | -58.93% | 0.98% | 4.37% | 28.48% | |
73 Outperform | $2.88B | 15.81 | 11.29% | ― | -0.02% | -1.87% | |
65 Neutral | $8.56B | 23.11 | 11.39% | ― | 3.51% | 29.65% | |
61 Neutral | $67.28B | 29.30 | 101.43% | 0.66% | 9.31% | 5.92% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
MCK
McKesson
941.89
282.89
42.93%
COR
Cencora
334.71
72.45
27.63%
CAH
Cardinal Health
216.36
86.53
66.65%
HSIC
Henry Schein
74.87
2.87
3.99%
PBH
Prestige Consumer Healthcare
62.30
-21.62
-25.76%
McKesson Corporate Events
Business Operations and StrategyFinancial Disclosures
McKesson Affirms Fiscal 2026 Outlook, Sets Earnings Date
Positive
Mar 6, 2026
McKesson Corporation said on March 6, 2026, that it will release its fourth quarter fiscal 2026 results after market close on May 7, 2026, followed by a webcasted earnings call led by CEO Brian Tyler and CFO Britt Vitalone. The company also reaffirmed its fiscal 2026 full-year outlook and highlighted Vitalone’s participation in several major healthcare investor conferences in March and May, underscoring its ongoing engagement with the investment community through webcasts available on its investor relations site.
The most recent analyst rating on (MCK) stock is a Hold with a $925.00 price target. To see the full list of analyst forecasts on McKesson stock, see the MCK Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.