01—Abstract
Summary
Summary of the 10-Q filed August 6, 2025. Cited figures are marked; the original filing is the authoritative source.
McKesson Corporation reported strong revenue growth of 23% for the second quarter of fiscal year 2025, reaching $97.8 billiona, primarily driven by its U.S. Pharmaceutical segment.
Despite this top-line expansion, net income attributable to McKesson Corporation saw a decrease of 14% to $784 millionb, resulting in diluted earnings per share of $6.25, down from $7.00 in the prior year period. This decline is partly attributed to a $189 million provision for bad debts related to the Rite Aid bankruptcy and increased operating expenses associated with recent significant acquisitions. The company completed two major acquisitions during the quarter: PRISM Vision Holdings, LLC for $874 million and Community Oncology Revitalization Enterprise Ventures, LLC (Core Ventures) for $2.5 billion.
These acquisitions, along with increased investments in technology, contributed to a rise in operating expenses and a significant use of cash in investing activities. McKesson also returned $671 millionc to shareholders through share repurchases and dividends, and announced an increase in its quarterly dividend to $0.82 per share.
02—Key points
Key Highlights
- Revenues increased by 23% year-over-year to $97.8 billion, primarily driven by the U.S. Pharmaceutical segment.
- Net income attributable to McKesson Corporation decreased by 14% to $784 million, with diluted EPS falling to $6.25 from $7.00 in the prior year.
- The company made significant strategic acquisitions, including PRISM Vision for $874 million and Core Ventures for $2.5 billion.
- Operating expenses increased by 6%, notably impacted by a $189 million provision for bad debts related to Rite Aid's bankruptcy.
- Cash used in operating activities was $918 million, and cash used in investing activities was $3.6 billion, largely due to acquisitions.
- McKesson returned $671 million to shareholders via share repurchases ($581 million) and dividends ($90 million).
- The company announced its intention to separate the Medical-Surgical Solutions segment into an independent company.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, McKesson Corp kept $0.01.
- Revenue$97.83B100.0%
- Cost of revenue−$94.55B96.6%
- Gross profit$3.28B3.4%
- Operating costs−$2.24B2.3%
- Operating income$1.04B1.1%
- Interest, other & tax−$252.0M0.3%
- Net income$784.0M0.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed August 6, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $97.83B$79.28B | +23.4% |
| Cost of Revenue | $94.55B$76.13B | +24.2% |
| Gross Profit | $3.28B$3.15B | +4.0% |
| SG&A Expenses | $2.20B$2.00B | +9.7% |
| Operating Expenses | $2.24B$2.12B | +5.7% |
| Operating Income | $1.04B$1.03B | +0.7% |
| Net Income | $784.00M$915.00M | −14.3% |
| EPS (Basic) | $6.28$7.04 | −10.8% |
| EPS (Diluted) | $6.25$7.00 | −10.7% |
| Shares Outstanding (Basic) | 124.90M129.80M | −3.8% |
| Shares Outstanding (Diluted) | 125.50M130.70M | −4.0% |
05—Questions
Frequently Asked Questions
What drove the significant increase in revenue for the quarter?
Revenue increased by 23% to $97.8 billion, largely driven by market growth in the U.S. Pharmaceutical segment. This growth was fueled by higher volumes from retail national account customers and an expansion in specialty pharmaceuticals, including increased drug utilization and new product launches. Growth in the Prescription Technology Solutions segment also contributed.
Why did net income and earnings per share decrease despite the strong revenue growth?
Net income attributable to McKesson Corporation decreased by 14% to $784 million, and diluted EPS fell to $6.25. This was primarily due to a $189 million provision for bad debts related to Rite Aid's bankruptcy, increased operating expenses from recent acquisitions and modernization initiatives, and a prior year gain from investments in equity securities. The increase in operating expenses outpaced gross profit growth.
What is the strategic significance of the acquisitions of PRISM Vision and Core Ventures?
The acquisition of PRISM Vision (80% interest) for $874 million and Core Ventures (70% interest) for $2.5 billion are significant strategic moves, primarily impacting the U.S. Pharmaceutical segment. PRISM Vision strengthens ophthalmology and retina management services, while Core Ventures expands McKesson's capabilities within the oncology platform, aligning with their strategy to provide comprehensive solutions to healthcare providers and biopharma partners.
What is the company's outlook regarding ongoing litigation, particularly opioid-related claims?
McKesson continues to be involved in numerous opioid-related lawsuits. While the company has entered into significant settlement agreements, including payments totaling approximately $2.0 billion to 48 states and their subdivisions under a master settlement, it notes that not all claims are covered. The company believes it has valid legal defenses for matters not settled and is vigorously defending itself. While accruals exist for certain claims, the ultimate outcome and potential financial impact of ongoing litigation remain uncertain and could materially affect financial results.
06—Continue