Why does GAAP EPS look so much stronger than last year?

The prior-year quarter included a $643 million charge tied to remeasuring the Canadian retail businesses held for sale and a $227 million restructuring charge. Excluding those and other items, EPS grew 39% to $9.86 on an adjusted basis, which is the figure management emphasizes.

How much of the earnings growth came from one-time items?

Some did. Management cited net gains in Oncology & Multispecialty from the sale of an investment and market decisions within The US Oncology Network, plus a lower tax rate. These contributed to the quarter's adjusted results, so investors may want to separate them from recurring operating growth.

Is the guidance raise sustainable, and does McKesson provide GAAP guidance?

McKesson raised FY2026 Adjusted EPS guidance to $38.35–$38.85 and cites strong first-half performance and momentum in its growth pillars. It does not provide GAAP EPS guidance because LIFO adjustments, litigation contingencies, and restructuring charges are difficult to forecast.

Why is free cash flow lower in the first half despite strong Q2 cash generation?

First-half operating cash flow was $1.5 billion, with working-capital investment in receivables and inventories, and capital spending plus acquisitions consumed additional cash. The $2.2 billion quarterly free cash flow figure is derived from fiscal year-to-date amounts less Q1 and reflects a strong second quarter within that period.

MCK 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 5, 2025. Cited figures are marked; the original filing is the authoritative source.

McKesson (MCK) reported fiscal Q2 2026 results (quarter ended September 30, 2025) with record quarterly revenue of $103.2 billion^a, up 10% year over year, and GAAP diluted EPS of $8.92 versus $1.87 a year ago.

The GAAP comparison is distorted by a prior-year $643 million^b Canadian business remeasurement charge and a $227 million restructuring charge, so the more meaningful measure is Adjusted EPS of $9.86, up 39%. Adjusted Earnings rose 34% to $1.227 billion, helped by acquisitions, net gains in Oncology & Multispecialty from an investment sale and US Oncology Network market decisions, and a lower tax rate. The quarter's operating strength was broad.

Oncology & Multispecialty revenue grew 32% to $12.0 billion^c and adjusted segment operating profit rose 71% to $397 million. North American Pharmaceutical revenue grew 8% to $86.5 billion with adjusted segment profit up 13%. Free cash flow was $2.2 billion for the quarter, though first-half free cash flow of $1.1 billion reflects heavy working-capital build and $3.4 billion of acquisition spending.

Shareholder returns in the first half totaled $1.6 billion^d, including $1.4 billion of buybacks. Balance sheet changes include higher goodwill and intangibles from acquisitions, a rise in total debt to roughly $7.8 billion, and a stockholders' deficit that narrowed to $(1.7) billion. Management raised FY2026 Adjusted EPS guidance by $0.30 to $38.35 to $38.85, implying 16% to 18% growth, building on an $0.80 increase at the September Investor Day.

GAAP EPS is not guided because items such as LIFO adjustments and litigation are not reasonably forecastable. The release also notes a pending agreement to sell the Norwegian retail and distribution businesses and an intention to separate the Medical-Surgical Solutions segment, which is referenced in the forward-looking statements.

02—Key points

Key Highlights

Record quarterly revenue of $103.2B, up 10% YoY, led by North American Pharmaceutical and oncology distribution growth
GAAP diluted EPS of $8.92 vs. $1.87 prior year; adjusted diluted EPS of $9.86, up 39%, with the prior-year GAAP base depressed by a $643M Canadian remeasurement charge
Oncology & Multispecialty revenue up 32% to $12.0B; adjusted segment operating profit up 71% to $397M, aided by a one-time investment sale gain and acquisitions
FY2026 Adjusted EPS guidance raised $0.30 to $38.35–$38.85 (16–18% growth), on top of an $0.80 raise at Investor Day
Q2 free cash flow of $2.2B, but first-half FCF of $1.1B after $3.4B of acquisition spending and working-capital build
First-half shareholder returns of $1.6B, including $1.4B of share repurchases and $179M of dividends
Pending sale of Norway retail and distribution businesses; reportable segments reorganized effective Q2 FY2026

03—Questions

Frequently Asked Questions

Why does GAAP EPS look so much stronger than last year?
The prior-year quarter included a $643 million charge tied to remeasuring the Canadian retail businesses held for sale and a $227 million restructuring charge. Excluding those and other items, EPS grew 39% to $9.86 on an adjusted basis, which is the figure management emphasizes.
How much of the earnings growth came from one-time items?
Some did. Management cited net gains in Oncology & Multispecialty from the sale of an investment and market decisions within The US Oncology Network, plus a lower tax rate. These contributed to the quarter's adjusted results, so investors may want to separate them from recurring operating growth.
Is the guidance raise sustainable, and does McKesson provide GAAP guidance?
McKesson raised FY2026 Adjusted EPS guidance to $38.35–$38.85 and cites strong first-half performance and momentum in its growth pillars. It does not provide GAAP EPS guidance because LIFO adjustments, litigation contingencies, and restructuring charges are difficult to forecast.
Why is free cash flow lower in the first half despite strong Q2 cash generation?
First-half operating cash flow was $1.5 billion, with working-capital investment in receivables and inventories, and capital spending plus acquisitions consumed additional cash. The $2.2 billion quarterly free cash flow figure is derived from fiscal year-to-date amounts less Q1 and reflects a strong second quarter within that period.

04—Continue

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