What is McKesson planning to do with Medical-Surgical Solutions?

McKesson announced its intention to separate the Medical-Surgical Solutions segment into an independent public company, referred to as NewCo. The company says this will sharpen focus on higher-growth Oncology and Biopharma Solutions and unlock shareholder value. The release does not provide the form (e.g., spin-off or sale), timing, or financial terms, and says more information will come as the process advances.

What is the fiscal 2026 earnings outlook?

McKesson guided fiscal 2026 Adjusted EPS to $36.75 to $37.55, implying 11% to 14% growth over fiscal 2025, or 13% to 16% excluding net gains from McKesson Ventures equity investments in fiscal 2025. It does not forecast GAAP EPS because it cannot reliably predict items such as LIFO adjustments, litigation gains and losses, and restructuring charges.

How did the quarter's earnings quality compare to the headline growth?

Q4 GAAP diluted EPS of $10.01 was close to Adjusted EPS of $10.12, so the gap is small this quarter. However, the adjustments were material: Q4 included $260M of pre-tax antitrust settlement gains (excluded from Adjusted results), which were offset by a $100M-plus other adjustments charge and restructuring costs. A lower tax rate was a notable contributor to Adjusted EPS growth, which investors should keep in mind when evaluating sustainability.

How strong is the company's cash flow and capital return?

For fiscal 2025, operating cash flow was $6.1B (up 41%) and free cash flow was $5.2B (up 44%). Capital expenditures totaled $859M. McKesson returned $3.5B to shareholders, comprising $3.1B in share repurchases and $345M in dividends, and reduced its diluted share count by 4% year over year.

What drove the revenue growth, and what segment is the core of the business?

Revenue growth was driven primarily by U.S. Pharmaceutical, which generated $327.7B of the $359.1B full-year total (up 18%). Growth came from higher prescription volumes from retail national customers and specialty distribution, including oncology. Prescription Technology Solutions grew 9% to $5.2B, and Medical-Surgical Solutions grew 1% to $11.4B. International revenue rose 4% to $14.7B, though divested Canadian retail businesses weighed on that segment's reported results.

MCK 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 8, 2025. Cited figures are marked; the original filing is the authoritative source.

McKesson reported fiscal Q4 and full-year 2025 results (quarter and year ended March 31, 2025) that beat its own momentum narrative on the bottom line.

Q4 revenue rose 19% to $90.8 billion^a, GAAP diluted EPS was $10.01 (up 66%), and Adjusted EPS was $10.12 (up 64%), helped by a lower tax rate and strong operations. For the full year, revenue reached $359.1 billion (up 16%), GAAP diluted EPS was $25.72, and Adjusted EPS was $33.05 (up 20%). Free cash flow was $5.2 billion on $6.1 billion of operating cash flow, and the company returned $3.5 billion to shareholders through $3.1 billion of buybacks and $345 million of dividends.

Investors should note that a meaningful share of the Adjusted EPS gain reflects non-GAAP adjustments, including a $667 million^b pre-tax remeasurement loss on the agreement to sell Canadian businesses, offset by antitrust settlement gains and a Rite Aid-related credit. The headline strategic item is the intent to separate the Medical-Surgical Solutions segment into an independent company ("NewCo"). Management frames the move as a way to focus capital on higher-growth, higher-margin Oncology and Biopharma Solutions and to unlock shareholder value, but the release gives no timing, structure, or financial details and says more will follow as the process progresses.

For fiscal 2026, McKesson guided Adjusted EPS to $36.75 to $37.55^c, implying 11% to 14% growth (13% to 16% excluding fiscal 2025 McKesson Ventures gains). It reaffirmed its long-term Adjusted EPS growth target of 12% to 14%, raised the U.S. Pharmaceutical long-term Adjusted Segment Operating Profit growth target to 6% to 8%, and does not guide GAAP EPS.

The filing is furnished under Item 2.02 and is therefore not deemed "filed" for Exchange Act Section 18 purposes. The release is preliminary, and the company will hold a conference call the same day at 4:30 PM ET.

02—Key points

Key Highlights

Q4 FY25 revenue of $90.8B (+19%) and GAAP diluted EPS of $10.01 (+66%); Adjusted EPS of $10.12 (+64%), aided by a lower tax rate.
Full-year FY25 revenue of $359.1B (+16%), GAAP diluted EPS of $25.72 (+15%), and Adjusted EPS of $33.05 (+20%), helped by lower share count (diluted shares down 4%).
Announced intent to separate the Medical-Surgical Solutions segment (FY25 revenue $11.4B, Adjusted Segment Operating Profit $1.0B) into an independent company; timing, structure, and terms not yet disclosed.
FY26 Adjusted EPS guidance of $36.75 to $37.55 (11% to 14% growth; 13% to 16% excluding McKesson Ventures gains), with no GAAP EPS guidance provided.
Long-term Adjusted EPS growth target of 12% to 14% reaffirmed; U.S. Pharmaceutical Adjusted Segment Operating Profit growth target raised to 6% to 8% from 5% to 7%.
Strong cash generation: FY25 operating cash flow of $6.1B and free cash flow of $5.2B (up 44%), with $3.5B returned to shareholders including $3.1B in buybacks.
Significant non-GAAP items in FY25 include a $667M pre-tax loss on remeasuring Canadian assets held for sale, a $444M pre-tax antitrust settlement gain, and a $206M Rite Aid-related credit; the Canadian sale is a material item to monitor.

03—Questions

Frequently Asked Questions

What is McKesson planning to do with Medical-Surgical Solutions?
McKesson announced its intention to separate the Medical-Surgical Solutions segment into an independent public company, referred to as NewCo. The company says this will sharpen focus on higher-growth Oncology and Biopharma Solutions and unlock shareholder value. The release does not provide the form (e.g., spin-off or sale), timing, or financial terms, and says more information will come as the process advances.
What is the fiscal 2026 earnings outlook?
McKesson guided fiscal 2026 Adjusted EPS to $36.75 to $37.55, implying 11% to 14% growth over fiscal 2025, or 13% to 16% excluding net gains from McKesson Ventures equity investments in fiscal 2025. It does not forecast GAAP EPS because it cannot reliably predict items such as LIFO adjustments, litigation gains and losses, and restructuring charges.
How did the quarter's earnings quality compare to the headline growth?
Q4 GAAP diluted EPS of $10.01 was close to Adjusted EPS of $10.12, so the gap is small this quarter. However, the adjustments were material: Q4 included $260M of pre-tax antitrust settlement gains (excluded from Adjusted results), which were offset by a $100M-plus other adjustments charge and restructuring costs. A lower tax rate was a notable contributor to Adjusted EPS growth, which investors should keep in mind when evaluating sustainability.
How strong is the company's cash flow and capital return?
For fiscal 2025, operating cash flow was $6.1B (up 41%) and free cash flow was $5.2B (up 44%). Capital expenditures totaled $859M. McKesson returned $3.5B to shareholders, comprising $3.1B in share repurchases and $345M in dividends, and reduced its diluted share count by 4% year over year.
What drove the revenue growth, and what segment is the core of the business?
Revenue growth was driven primarily by U.S. Pharmaceutical, which generated $327.7B of the $359.1B full-year total (up 18%). Growth came from higher prescription volumes from retail national customers and specialty distribution, including oncology. Prescription Technology Solutions grew 9% to $5.2B, and Medical-Surgical Solutions grew 1% to $11.4B. International revenue rose 4% to $14.7B, though divested Canadian retail businesses weighed on that segment's reported results.

04—Continue

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