MCK McKesson Corporation 10-Q 2026-09-30 section summaries

McKesson — FY2027 Q2 and H1 ended September 30, 2026

Consolidated results

Revenue grew 7.6% in both Q2 and H1. Gross profit and operating income grew faster, while higher expenses included Q2 SG&A of $2.269B versus $2.074B and interest expense of $105M versus $74M. H1 SG&A was $4.533B versus $4.270B, and interest expense was $182M versus $123M. H1 consolidated net income increased, but McKesson-attributable income declined: it included a $391M deduction for redemption-value adjustments to redeemable noncontrolling interests, while income attributable to noncontrolling interests rose to $496M from $100M. Lower diluted weighted-average shares helped lift EPS.

Segment performance

Oncology & Multispecialty revenue growth accelerated from 24.4% in Q2 to 28.6% for H1; H1 operating-profit growth was 24.4%, compared with 6.0% in Q2. Prescription Technology Solutions’ Q2 profit growth contrasted with nearly flat H1 profit, which included restructuring charges. Medical-Surgical Solutions operating profit fell 25.5% in Q2 and 35.1% in H1, including planned-separation charges of $42M in Q2 and $87M in H1. The Other segment reflects the January 2026 sale of the Norwegian operations.

Corporate expenses included restructuring charges of $52M versus $38M and Medical-Surgical separation charges of $4M in Q2; H1 corporate expenses included restructuring charges of $102M versus $67M and separation charges of $27M. H1 also included a $36M credit related to estimated opioid-claims liability.

Cash flow and capital allocation

Working capital was a major cash-flow factor: receivables used $2.850B and inventories used $4.032B, partly offset by $7.797B provided by drafts and accounts payable. Cash and cash equivalents were $6.528B at September 30, 2026, versus $4.004B a year earlier. The quarterly dividend increased from $0.82 to $0.94 per share in July. The Board authorized an additional $5.0B of repurchases in April; $4.280B remained authorized at September 30, compared with $2.719B at March 31. H1 repurchases included two $2.3B accelerated share repurchase programs.

Balance sheet and financing

Tangible common equity, calculated as McKesson stockholders’ deficit less goodwill and intangible assets, was negative $19.168B. Net intangible assets included service agreements of $2.345B, customer relationships of $715M, provider networks of $369M, and trademarks and trade names of $273M. Goodwill impairment tests found no impairment. Redeemable noncontrolling interests increased to $2.563B from $943M.

On June 1, Apollo-managed funds invested approximately $1.25B in convertible preferred equity for an approximately 13% minority interest in Medical-Surgical Solutions. McKesson retained control and consolidates the business, while planning to separate it into an independent company. The investment and related financing contributed to the increase in redeemable noncontrolling interests and debt. Medical-Surgical Solutions added secured term-loan facilities; McKesson’s new $5.0B senior unsecured revolver, maturing in 2031, had no borrowings at September 30, and the company reported covenant compliance. McKesson repaid $500M of 1.30% notes at maturity in August; €500M of 1.625% notes were repaid with cash in October.

H1 restructuring, impairment and related charges were $221M, versus $110M. Programs include a new $230M–$310M corporate operating-model initiative, a $200M–$250M Prescription Technology Solutions program (with $99M recorded cumulatively), and a $650M–$700M enterprise technology program (with $562M recorded cumulatively). In early November, McKesson acquired Precision Medicine Group for approximately $2.25B and a controlling interest in Spectrum Vision Partners for approximately $525M; both are expected in Oncology & Multispecialty beginning in FY2027 Q3.

Legal exposure and other items

Accrued opioid-related litigation liability was $5.163B at September 30, 2026, down from $5.692B at March 31; $600M was current and $4.563B long-term. McKesson made $496M of settlement payments during H1. The distributors’ $7.9B aggregate governmental settlement is payable through 2038, with at least 85% designated for remediation; a separate $196M tribal settlement is payable through 2027. Other agreements include approximately $174M to Alabama and its subdivisions through 2031 and $152M to certain West Virginia subdivisions through 2033. Unsettled claims remain, and the company warns that adverse outcomes could materially affect financial position, cash flows, liquidity or results; losses outside recorded accruals were not considered probable or reasonably estimable. A cybersecurity incident has also prompted putative class actions alleging inadequate protection of personal information. Separately, McKesson recognized a $50M gain in cost of sales from antitrust settlements in Q2.

McKesson — Q2 and H1 FY2027

Three and six months ended September 30, 2026; dollar amounts in millions except per-share data.

Consolidated results

Revenue grew 8% in both Q2 and H1, reflecting North American Pharmaceutical market growth—including higher institutional and retail national-account volumes, drug utilization such as GLP-1 medicines, and new launches—and increased specialty-drug sales in Oncology & Multispecialty. Branded-drug price declines and conversions to generics partly offset growth. Gross profit increased 12% in each period, with gross margin up 14 basis points to 3.57% in Q2 and 3.53% in H1. Cost of sales included antitrust settlement gains of $50 million in Q2 and $56 million in H1 FY2027, versus $8 million in H1 FY2026.

Operating expenses rose 10% in Q2 and 8% in H1. Selling, distribution, general and administrative expense was $2,269 million versus $2,074 million in Q2 and $4,533 million versus $4,270 million in H1; Medical-Surgical separation costs included in these expenses were $46 million and $114 million, respectively. H1 FY2026 included a $189 million Rite Aid bankruptcy bad-debt provision. Restructuring, impairment and related charges were $85 million versus $63 million in Q2 and $221 million versus $110 million in H1. H1 FY2027 claims and litigation included a $36 million credit related to estimated opioid-claim liabilities, versus $2 million of charges in H1 FY2026.

Segment results

North American Pharmaceutical’s profit benefited from higher volumes and antitrust-settlement cash receipts; H1 also compared favorably with the prior-year Rite Aid provision. Oncology & Multispecialty growth reflected specialty pharmaceutical sales and provider solutions, partly offset by higher costs and the absence of a prior-year $51 million investment-sale/market-decision gain. Prescription Technology Solutions benefited from higher third-party logistics volumes and demand for access solutions, partly offset by costs and restructuring. Medical-Surgical Solutions revenue grew, but profit fell with separation costs, weaker ambulatory-care contribution and higher H1 operating expenses.

Cash flow and capital allocation

The increase in operating cash flow reflected higher net income and working-capital timing, including a $2.6 billion cash benefit from accounts payable, partly offset by $833 million of inventory-related cash use, $554 million of receivables-related cash use and $630 million of higher income-tax payments. Prior-year investing cash flow included $3.4 billion of net acquisition payments.

McKesson repurchased $3.4 billion of common stock and paid $198 million in dividends in H1. The Board authorized an additional $5.0 billion of repurchases; remaining authorization was $4.280 billion at September 30, 2026. The company executed two $2.3 billion accelerated share repurchases during 2026. On July 21, the quarterly dividend was raised from $0.82 to $0.94 per share.

Liquidity, financing and strategic developments

Cash, cash equivalents and restricted cash were $6.619 billion at September 30, 2026, versus $4.068 billion at March 31, 2026. Working capital was negative $7.711 billion, improving from negative $9.807 billion. The debt-to-capital ratio rose to 152.9% from 128.0%, primarily due to repurchases; the ratio excludes noncontrolling interests and accumulated other comprehensive loss from stockholders’ equity. Working-capital needs are substantial and vary with sales, inventory, customer receipts, vendor-payment timing and seasonality. Foreign subsidiaries held approximately $2.1 billion of cash, primarily intended for foreign operations.

Medical-Surgical Solutions subsidiaries received $3.2 billion of net proceeds from secured term loans with principal amounts of $750 million due 2031, $250 million due 2028 and $2.25 billion due 2032; proceeds funded repayment of an intercompany loan. Apollo-managed funds invested approximately $1.25 billion for about 13% of Medical-Surgical through convertible preferred equity; McKesson retains control and consolidates the business while preparing it for separation. McKesson also replaced prior revolving facilities with a $5.0 billion senior unsecured credit facility maturing in 2031. It repaid $500 million of 1.30% notes at maturity in August 2026. Increased average loan balances, primarily related to the Medical-Surgical credit agreement, contributed to higher interest expense.

The estimated opioid-related litigation liability was $5.2 billion at September 30, 2026, payable under settlement agreements. McKesson reported covenant compliance and expects to meet cash needs through cash balances, operating cash flow, credit sources and future borrowing, while noting that market disruption could impair liquidity or increase borrowing costs.

After quarter-end, McKesson agreed to acquire a 49% interest in Option Care Health for approximately $1.4 billion cash, with closing expected in H1 calendar 2027, subject to approvals. In early November, it completed the approximately $2.25 billion cash acquisition of Precision Medicine Group and the approximately $525 million acquisition of a controlling interest in Spectrum Vision Partners; both are expected to be reported in Oncology & Multispecialty.

New Corporate restructuring initiatives are expected to cost $230 million–$310 million and be substantially complete by FY2028. Prescription Technology Solutions recorded $18 million of restructuring charges in Q2 and $79 million in H1, with its initiative expected to be substantially complete by FY2029. Previously approved enterprise technology and modernization initiatives carry expected total charges of $650 million–$700 million. No goodwill impairment was recorded in Q2 or H1; management cited government actions, regulatory uncertainty and changing market assumptions as factors that could reduce reporting-unit fair values. The business also remains exposed to evolving drug-pricing policy, the federal 340B program and government healthcare funding.

McKesson reported no material change in its exposure to interest-rate or foreign-currency exchange-rate risks compared with the exposures disclosed in its FY2026 Form 10-K for the year ended March 31, 2026. The section provided no updated quantitative sensitivity or exposure figures.

As of September 30, 2026, the CEO and CFO concluded that disclosure controls and procedures were effective. During the quarter ended September 30, 2026, no changes to internal control over financial reporting materially affected, or were reasonably likely to materially affect, those controls.

The company reported no material changes during the quarter to the risk factors disclosed in its Form 10-K for the fiscal year ended March 31, 2026, except for factual updates discussed elsewhere in this Form 10-Q. The section identifies no new or specifically changed risks.

McKesson reported two executive Rule 10b5-1 trading arrangements, both adopted during open trading windows:

Each plan may end earlier if completed or terminated. Both executives represented that their plans were intended to satisfy the affirmative-defense requirements of Rule 10b5-1(c). The share totals may include shares withheld to cover taxes on net-settled equity awards.