# McKesson (MCK)

Sector: Healthcare distribution

| Field | Value |
|---|---|
| Price | $1059.37 |
| Market cap | $122B |
| Intrinsic value source | Analysts |
| Data as of | 2026-11-10 |
| Next earnings | 2027-02-03 (estimate) |

Analysts: Bullish

Picks: Research only

Discount category: Pricey

## In short

McKesson trades at a premium because investors pay for steady drug distribution profits and buybacks, and EPS growth at its long-term target with a clean Medical-Surgical separation can earn it.

## Themes and gap

- Themes: Regulation and courts (regulation-legal)
- Gap type: Slow (slow)
- Why: The Q3 fiscal 2027 report expected in early February 2027 is the next test, but proof that EPS growth stays at the long-term target comes over several years.

## About

McKesson distributes prescription drugs and medical supplies, and it sells services to drug makers, pharmacies and care providers, mostly in the United States and Canada. It has four segments: North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions and Medical-Surgical Solutions. In Q2 fiscal 2027, which ended on September 30, 2026, revenue was $111.0 billion. North American Pharmaceutical had revenue of $91.4 billion, Oncology & Multispecialty $15.0 billion, Medical-Surgical Solutions $3.1 billion and Prescription Technology Solutions $1.5 billion. Revenue was $403.4 billion in fiscal 2026. Its fiscal year ends on March 31. Funds managed by affiliates of Apollo own about 13% of Medical-Surgical Solutions, and McKesson plans to separate that business into an independent company. The company is based in Irving, Texas, and its shares trade on the New York Stock Exchange.

## Thesis

McKesson trades at a premium because investors pay for steady growth in a business with few rivals. Adjusted EPS rose 18% to $39.11 in fiscal 2026, and the company now expects $45.60 to $46.40 for fiscal 2027, a growth of 17% to 19%. Three large distributors deliver most prescription drugs in the United States, and McKesson extended its distribution agreement with CVS Health through June 2032. Buybacks also lift EPS: diluted shares fell 6% in a year to 116.7 million in Q2 fiscal 2027. For the premium to be earned, three things must be true. Adjusted EPS must keep growing at or above the long-term target of 13% to 16% a year as oncology and biopharma services grow. The company must separate Medical-Surgical Solutions, integrate Precision Medicine Group and close the Option Care Health investment, which it expects in the first half of 2027, without large new charges. The opioid liability of $5.2 billion, paid out through 2038, and the class actions after the August 2026 cybersecurity incident must not grow into larger costs. The Q3 fiscal 2027 report, expected in early February 2027, gives the next test, and the fiscal 2028 guidance in May 2027 gives a larger one. If EPS growth slows toward the growth of drug volumes, the premium can shrink over the next two years.

## Checkpoints

- Feb 3, 2027 (estimate): Q3 fiscal 2027 results: EPS growth and guidance. Status: Pending. Watch: Adjusted EPS growth of 15% or more and fiscal 2027 guidance kept or raised pass; slower growth or a guidance cut fails.
- May 2027 (estimate): Fiscal 2027 results and fiscal 2028 guidance. Status: Pending. Watch: Fiscal 2028 adjusted EPS guidance with growth inside or above the 13% to 16% target pass; guidance below the target fails.

## Balance sheet

- Cash: $6.5B
- Debt: $9.2B
- Net debt: $2.7B
- Undrawn credit line: $5.0B, to April 2031
- Debt due within 12 months: $794M

McKesson funds its working capital mostly with payables to drug makers: drafts and accounts payable were $67.8 billion at September 30, 2026, against receivables of $30.8 billion and inventories of $28.2 billion. Cash was $6.53 billion and debt was $9.21 billion, of which $794 million is due within one year. Long-term debt rose from $5.26 billion at March 31, 2026, mainly because Medical-Surgical Solutions borrowed $3.2 billion of senior secured term loans due 2028 to 2032. The company also has a $5.0 billion revolving credit facility to April 2031 and a $5.0 billion commercial paper program, and nothing was drawn on either at September 30, 2026. Free cash flow was $2.6 billion in the first six months of fiscal 2027, and the company bought back $3.4 billion of stock in that period. The remaining buyback authorization was $4.3 billion. Stockholders' deficit was $3.95 billion because of past buybacks. The company paid about $2.25 billion for Precision Medicine Group on November 2, 2026, after the quarter.

As of 2026-09-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/927653/000092765326000281/mck-20260930.htm
- https://www.sec.gov/Archives/edgar/data/927653/000092765326000279/mck_exhibit991x9302026.htm

## Dividends

- Dividend yield: 0.3% (last 12 months, at the current price)
- Paid per share, last 12 months: $3.40 (4 payments)
- Current annual rate: $3.76 ($0.94 x 4 a year)
- Payout ratio: 8% of the earnings of the last fiscal year (the year ended 2026-03-31)
- Latest ex-dividend date: 2026-09-01, $0.94 per share
- Growth over the last 5 years: 14.5% a year
- Growth over the last 10 years: 11.7% a year

Dividends per share by year: 2016: $1.12, 2017: $1.24, 2018: $1.46, 2019: $1.60, 2020: $1.66, 2021: $1.78, 2022: $2.02, 2023: $2.32, 2024: $2.66, 2025: $3.06.

Source: company filings and market data, read on 2026-11-09.

## Recent events

- 2026-11-04: McKesson reported Q2 fiscal 2027 results. Revenue rose 8% to $111.0 billion, and adjusted EPS rose 18% to $11.68. Adjusted operating profit of North American Pharmaceutical rose 22%, and revenue of Oncology & Multispecialty rose 24%. Free cash flow was $2.9 billion. The company raised its fiscal 2027 adjusted EPS guidance to $45.60 to $46.40 from $44.20 to $45.00. It also extended its distribution agreement with CVS Health through June 2032.
- 2026-11-02: McKesson completed the purchase of Precision Medicine Group, a provider of clinical research and biopharma commercialization services, for about $2.25 billion in cash.
- 2026-10-05: McKesson agreed to invest about $1.4 billion in cash for a 49% minority interest in Option Care Health, a home and alternate site infusion provider. Clayton, Dubilier & Rice will hold the other 51%. The company expects the deal to close in the first half of calendar 2027, after approvals by Option Care Health stockholders and regulators.
- 2026-08-25: McKesson found a cybersecurity incident in its information systems. Since September 2026, several class action complaints about the protection of health and personal data have been filed against the company in the Northern District of Texas.
- 2026-08-05: McKesson reported Q1 fiscal 2027 results. Revenue rose 8% to $105.4 billion, and adjusted EPS rose 20% to $9.93. GAAP EPS fell to $5.15 because of a $293 million adjustment to the redemption value of the Apollo interest in Medical-Surgical Solutions. The board raised the quarterly dividend by 15% to $0.94 per share, and the company raised its fiscal 2027 adjusted EPS guidance to $44.20 to $45.00.
- 2026-06-01: Funds managed by affiliates of Apollo invested about $1.25 billion in convertible preferred equity of Medical-Surgical Solutions for a minority interest of about 13%. McKesson keeps control of the business, which it plans to separate.
- 2026-05-07: McKesson reported fiscal 2026 results. Revenue rose 12% to $403.4 billion, adjusted EPS rose 18% to $39.11 and free cash flow was $5.4 billion. The board added $5.0 billion to the share repurchase authorization, and the company started a $2.25 billion accelerated share repurchase. It gave fiscal 2027 adjusted EPS guidance of $43.80 to $44.60 and kept its long-term growth target of 13% to 16%.

## Latest news and filings

- Last earnings: 2026-11-04 (8-K: https://www.sec.gov/Archives/edgar/data/927653/000092765326000279/)
- Next earnings: 2027-02-03 (expected; the company has not confirmed it)

| Filed | Form | Headline | Period end | XBRL document | Link |
| --- | --- | --- | --- | --- | --- |
| 2026-11-04 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | mck-20260930 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000281/mck-20260930.htm |
| 2026-11-04 | 8-K | Earnings release |  | mck-20261104 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000279/mck-20261104.htm |
| 2026-10-06 | 8-K | Investor disclosure |  | mck-20261006 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000253/mck-20261006.htm |
| 2026-08-28 | 8-K | Investor disclosure |  | mck-20260825 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000247/mck-20260825.htm |
| 2026-08-05 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | mck-20260630 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000234/mck-20260630.htm |
| 2026-08-05 | 8-K | Earnings release |  | mck-20260805 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000232/mck-20260805.htm |
| 2026-07-24 | 8-K | Shareholder vote results |  | mck-20260722 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000215/mck-20260722.htm |
| 2026-07-01 | 8-K | Change of directors or officers and Investor disclosure |  | mck-20260629 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000185/mck-20260629.htm |
| 2026-06-12 | 8-K | New material agreement and New debt or financial obligation |  | mck-20260609 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000167/mck-20260609.htm |
| 2026-05-08 | 10-K | Annual report for the period ended Mar 31, 2026 | 2026-03-31 | mck-20260331 | https://www.sec.gov/Archives/edgar/data/927653/000092765326000069/mck-20260331.htm |

Every filing on SEC EDGAR (CIK 927653): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000927653&type=&dateb=&owner=include&count=40

## Risks

- Medium: The stock price expects EPS growth of 13% or more each year for many years. A slower year, a lost large customer or lower profit on branded drugs can lower the multiple that investors pay.
- Medium: McKesson had an estimated opioid litigation liability of $5.2 billion at September 30, 2026, mostly paid through 2038. Some local governments and private plaintiffs are not part of the settlements, and new rulings can add costs.
- Medium: The company is separating Medical-Surgical Solutions, integrating Precision Medicine Group and investing in Option Care Health at the same time. Delays, charges or weak results from these deals can lower returns.
- Low: After the cybersecurity incident of August 2026, class actions allege that the company did not protect health and personal data. Settlements or new rules on data protection can add costs.
- Low: U.S. drug pricing rules can change the profit that distributors earn on branded and generic drugs.

## Links

- Page: https://picks.utilarium.app/company/MCK/
- History of changes: https://picks.utilarium.app/company/MCK/history/
- JSON with full history: https://picks.utilarium.app/data/company/MCK.json

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