McKesson raises 2026 EPS guidance to $37.10-$37.90 as strategic acquisitions drive double-digit segment growth

Earnings Call Insights: McKesson Corporation (MCK) Q1 2026

Management View

• CEO Brian S. Tyler reported, "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, reflecting continued momentum across the enterprise." Tyler highlighted the completion of the acquisition of a controlling interest in Core Ventures and PRISM Vision, extending McKesson's reach in oncology and ophthalmology, stating these moves are "important step[s] forward in our efforts to expand access to exceptional cancer care in local communities, growing the footprint of the U.S. Oncology Network to approximately 3,300 providers across 700 sites in 30 states."
• Tyler emphasized McKesson's commitment to its people, operational excellence, and technological investment, specifically mentioning automation and cold chain capacity enhancements.
• Tyler announced the definitive agreement to sell the retail and distribution businesses in Norway, marking McKesson's exit from European operations. He stated, "the planned exit of the Norway business will mark the final phase in our strategy of fully divesting our European businesses."
• Tyler reiterated the ongoing process to separate the Medical-Surgical segment into an independent company, emphasizing portfolio management and shareholder value.
• CFO Britt J. Vitalone stated, "our first quarter results were strong, led by double-digit operating profit growth in 3 of the 4 segments. This robust performance exhibited across the enterprise reflects continued momentum in the operation, execution against our strategies and disciplined capital deployment, which is underpinned by the strength of our balance sheet."

Outlook

• McKesson raised its full year fiscal 2026 earnings per diluted share guidance to a new range of $37.10 to $37.90, up from the previous range of $36.90 to $37.70.
• The company anticipates fiscal 2026 revenue growth of 11% to 15% and operating profit growth of 9% to 13% compared to the prior year.
• In the U.S. Pharmaceutical segment, revenues are projected to increase 12% to 16%, with operating profits expected to reach the high end of the previously provided range of 12% to 16% growth.
• Prescription Technology Solutions segment is forecasted for revenue growth of 8% to 12% and operating profit growth of 9% to 13%.
• Medical-Surgical Solutions segment is expected to see revenues and operating profit increase 2% to 6%.
• The International segment is anticipated to have revenues ranging from a 2% decline to 2% growth and operating profit growth of 3% to 7%.
• The outlook includes $0.20 of operating profit related to the held-for-sale accounting for the Norway business.

Financial Results

• Consolidated revenues were $97.8 billion, up 23% year-over-year, led by the U.S. Pharmaceutical segment.
• Gross profit was $3.3 billion, up 7%, driven by specialty distribution and provider growth.
• Operating expenses decreased 1% to $1.9 billion, attributed to divestitures and cost optimization, partially offset by higher U.S. Pharmaceutical expenses from acquisitions.
• Operating profit was $1.4 billion, up 9%.
• Earnings per diluted share rose 5% to $8.26; excluding prior year equity gains, EPS increased 14%.
• U.S. Pharmaceutical segment revenues were $90 billion, a 25% increase, with GLP-1 medication revenues at $12.1 billion. Segment operating profit was $950 million, up 17%.
• Prescription Technology Solutions segment revenues grew 16% to $1.4 billion, operating profit up 21% at $269 million.
• Medical-Surgical Solutions reported $2.7 billion in revenue (up 2%) and $244 million in operating profit (up 22%).
• International segment revenues were $3.7 billion, up 1%; operating profit was $99 million, down 3%.
• Cash and cash equivalents at quarter end were $2.4 billion; negative free cash flow of $1.1 billion included $189 million in capital expenditures and $3.4 billion for acquisitions.

Q&A

• Eric Percher, Nephron Research, asked if upside in Prescription Technology Solutions is likely to materialize later in the year and what could drive results toward the upper range. Britt Vitalone responded, "there are a number of factors that underpin this performance, utilization being one, the success of our programs being another...our continued investment in this business...is going to help us continue to sustain, we believe, sustain this growth over the long-term growth period."
• Lisa Gill, JPMorgan, inquired about the impact of Rite Aid and the cadence for U.S. Pharma. Vitalone stated, "the impact of Rite Aid second bankruptcy on our operations and our operating profit growth is immaterial...we don't believe it's going to have an impact on our operations in fiscal 2026."
• Charles Rhyee, TD Cowen, asked about the revenue and profit outlook for Prescription Technology Solutions and the effect of insurer prior authorization initiatives. Vitalone said, "operating profit was driven by the success of our prior authorization programs, particularly around GLP-1 but non-GLP-1 programs also performed quite well."
• Allen Lutz, Bank of America, asked about brand price increases, tariffs, and generic pricing. Vitalone responded, "brand pricing is right in line with our expectations...in terms of generics, we are seeing good performance from our sourcing programs. We're not seeing anything unusual in the generics pricing environment as well."
• Daniel Grosslight, Citi, sought perspective on biosimilar adoption and its impact on financials. Tyler explained, "biosimilars...while slowing down revenue don't really have much of an impact in terms of materiality on the bottom line...this is a great long-term opportunity for distributors, for providers, also for patients."
• Brian Tanquilut, Jefferies, asked about OpEx trends and automation impact. Vitalone described ongoing improvements from automation and process efficiencies: "over time, what we've been able to do is to put more efficiencies automation within distribution centers within other parts of our business."
• Elizabeth Anderson, Evercore ISI, asked about long-term MSO strategy. Tyler emphasized differentiated MSO offerings in oncology and retina, with an intention to expand value-added services over time.
• Erin Wright, Morgan Stanley, asked about MSN impacts. Tyler said, "it's still very early in terms of MSN...we are currently and have been actively engaged with legislature, the administration, manufacturers, customers and consistently advocating and educating around the fact that we need to keep the community setting vibrant and healthy."
• Stephen Baxter, Wells Fargo, asked about uninsured rates and demand. Tyler responded, "our expectation is that it's not going to be dramatic. It's not going to be material. It's spread over a long period of time."
• George Hill, Deutsche Bank, questioned guidance allocation among segments. Vitalone clarified, "the $0.20 raise that we're doing now is specifically to the sale of Norway and the impact of the held-for-sale accounting. We have not made changes to -- any changes to the segment guidance for the medical or for the Rx Technology Solutions segment."
• Michael Cherny, Leerink Partners, asked about specialty growth durability. Tyler stated, "we think we're getting the good organic growth that exists in that market, complemented by expanding practices through recruiting additional physicians by adding smaller practices to existing practices."

Sentiment Analysis

• Analysts focused on guidance drivers, segment contribution, and market headwinds, with a generally neutral to slightly positive tone. Questions about Rite Aid, segment outlooks, and cost controls were met with detailed, confident management responses.
• Management maintained a confident and constructive tone throughout, with Tyler stating, "we are confident in our ability to carry forward the momentum with strength and focus, deliver meaningful results for our shareholders and accelerate our mission to advance health care for all."
• Compared to the previous quarter, management's tone remained confident, and analysts' tone shifted only marginally, with slightly increased focus on guidance mechanics and strategic execution.

Quarter-over-Quarter Comparison

• Guidance for 2026 EPS was raised to $37.10-$37.90 from the previous $36.75-$37.55, reflecting increased confidence after Q1 performance and the Norway divestiture.
• Strategic focus remains on oncology and biopharma, with the completion of Core Ventures and PRISM Vision acquisitions now contributing to results rather than being pending as in the previous quarter.
• Analysts continued to probe on segment growth drivers and the durability of recent trends, with more granular questions about automation, MSO strategies, and segment-specific profitability.
• Management's tone remained confident and consistent; the emphasis on automation and operational efficiency was more pronounced than in the prior quarter.

Risks and Concerns

• Management noted continued engagement with policymakers on potential regulatory and reimbursement changes, advocating for community-based care as the lowest cost and highest quality setting.
• Uncertainties persist around tariffs and MSN, but management stated these are accounted for in guidance and are not expected to be material in fiscal 2026.
• The company is monitoring the impact of uninsured rates and Medicaid changes but expects limited material effect.
• Integration of recent acquisitions is underway, with management vigilant about capturing expected synergies and operational efficiencies.

Final Takeaway

McKesson delivered a strong start to fiscal 2026, raising its full-year EPS outlook and reporting double-digit operating profit growth in key segments following the integration of recent strategic acquisitions. Management emphasized continued investment in automation and specialty platforms, an orderly exit from European operations, and disciplined capital deployment, reinforcing confidence in the durability of current business momentum and the company’s ability to deliver sustained shareholder value.

Read the full Earnings Call Transcript

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