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Mckesson Corp. (MCK)
NYSE:MCK
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McKesson
(NYSE:MCK)
77Outperform
Positive Factors
Acquisition Impact
The PRISM acquisition is expected to contribute an estimated $90 million in EBITDA to McKesson's 2026 pro forma post-deal adjusted EBITDA.
Earnings Growth
The company's sustained ability to deliver on long-term EPS growth goals is a reason to justify multiple expansion that translates to stock upside from current levels.
Pharmaceutical Strength
US Pharma is clearly exiting FY25 from a position of strength and is set up for ongoing strong EBIT growth in FY26 as utilization remains strong, specialty assets shine, and recent acquisitions contribute to growth.
Negative Factors
Med-Surg Performance
Most of the focus on the upcoming earnings is expected to be on Med-Surg, which has been challenged of late.
Prescription Technology Solutions
Prescription Technology Solutions missed modestly on EBIT.
Valuation Concerns
While fundamentals remain strong, the valuation feels relatively full compared to significant discounts across much of the coverage universe.
McKesson (MCK) vs. S&P 500 (SPY)
Market Cap
$88.78B
Dividend Yield0.38%
Average Volume (3M)1.11M
Price to Earnings (P/E)32.5
Beta (1Y)0.24
Revenue Growth14.29%
EPS Growth-1.20%
CountryUS
Employees45,000
SectorHealthcare
Sector Strength53
IndustryMedical - Distribution
Share Statistics
EPS (TTM)10.12
Shares Outstanding125,326,380
10 Day Avg. Volume830,078
30 Day Avg. Volume1,106,712
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.91
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit6.44
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$731.18Price Target Upside5.93% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
McKesson Business Overview & Revenue Model
Company DescriptionMcKesson Corporation is a global leader in healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information technology. Founded in 1833 and headquartered in Irving, Texas, McKesson operates in various sectors, primarily focusing on the distribution of pharmaceuticals and medical products, delivering comprehensive pharmacy solutions, and offering technology-driven healthcare solutions to improve patient care and outcomes.
How the Company Makes MoneyMcKesson makes money through multiple revenue streams primarily centered around its role as a key distributor of pharmaceuticals, medical supplies, and healthcare technology solutions. The company's primary revenue comes from its Pharmaceutical Distribution & Services segment, which supplies branded, generic, and specialty drugs to retail pharmacies, hospitals, and healthcare providers. McKesson also generates revenue through its Medical-Surgical Solutions segment by providing medical-surgical supplies and equipment to healthcare facilities. Additionally, McKesson earns from its Technology Solutions segment, which offers software and automation solutions that help healthcare providers manage their operations more efficiently. Key partnerships with pharmaceutical manufacturers, healthcare providers, and retail pharmacies play a significant role in driving McKesson's earnings, as they enable the company to leverage its extensive distribution network and expertise in supply chain management.
McKesson Financial Statement Overview
Summary
McKesson demonstrates robust revenue growth and operational stability, with efficient EBIT and EBITDA margins. However, the balance sheet reflects high leverage with negative equity, posing risks. The cash flow is strong, but declining free cash flow growth could be a challenge. Overall, McKesson is performing well operationally, but needs to address balance sheet leverage to mitigate risk.Income Statement
McKesson shows strong revenue growth with a 11.52% increase in TTM (Trailing-Twelve-Months) compared to the previous year. The company has a stable Gross Profit Margin of 3.76% and a healthy Net Profit Margin of 0.82%. EBIT and EBITDA margins are solid at 1.23% and 1.37% respectively, indicating efficient operations. However, the net income has decreased slightly, which may warrant closer examination.―
Balance Sheet
The balance sheet reflects a high Debt-to-Equity Ratio due to negative equity, which is a concern for leverage risk. The Equity Ratio is low at 7.76%, indicating a high reliance on debt. Despite this, the company maintains a reasonable level of total assets, suggesting potential for asset utilization improvement.60
Cash Flow
McKesson's cash flow statement reveals a strong Operating Cash Flow to Net Income Ratio of 0.88 and a Free Cash Flow to Net Income Ratio of 0.78, indicating good cash conversion. However, Free Cash Flow has declined by 38.91% from the previous year, suggesting potential challenges in sustaining cash flow growth.―
| Breakdown | ||||
| Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 308.95B | 276.71B | 263.97B | 238.23B | 231.05B | Gross Profit |
| 12.58B | 12.36B | 13.13B | 12.15B | 12.02B | EBIT |
| 3.91B | 4.38B | 2.85B | 3.52B | 1.66B | EBITDA |
| 4.67B | 5.74B | 3.11B | -3.60B | 2.31B | Net Income Common Stockholders |
| 3.00B | 3.56B | 1.11B | -4.34B | 900.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.58B | 4.68B | 3.53B | 6.28B | 4.01B | Total Assets |
| 67.44B | 62.32B | 63.30B | 65.02B | 61.25B | Total Debt |
| 7.39B | 7.29B | 7.54B | 9.40B | 9.40B | Net Debt |
| 2.81B | 2.62B | 4.01B | 3.13B | 5.39B | Total Liabilities |
| 69.04B | 63.81B | 65.09B | 63.57B | 54.54B | Stockholders Equity |
| -1.97B | -1.86B | -2.27B | -21.00M | 5.09B |
| Cash Flow | Free Cash Flow | |||
| 3.63B | 4.60B | 3.90B | 3.90B | 3.87B | Operating Cash Flow |
| 4.31B | 5.16B | 4.43B | 4.54B | 4.37B | Investing Cash Flow |
| -1.07B | -542.00M | -89.00M | -415.00M | -579.00M | Financing Cash Flow |
| -3.34B | -4.37B | -6.32B | -1.69B | -2.73B |
McKesson Technical Analysis
Positive
690.25
Price Trends
674.86
Positive
632.51
Positive
591.89
Positive
Market Momentum
10.16
Positive
49.25
Neutral
56.93
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCK, the sentiment is Positive. The current price of 690.25 is below the 20-day moving average (MA) of 698.32, above the 50-day MA of 674.86, and above the 200-day MA of 591.89, indicating a neutral trend. The MACD of 10.16 indicates Positive momentum. The RSI at 49.25 is Neutral, neither overbought nor oversold. The STOCH value of 56.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MCK.
McKesson Risk Analysis
McKesson disclosed 38 risk factors in its most recent earnings report. McKesson reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
McKesson Peers Comparison
Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $56.39B | 41.54 | 161.58% | 0.73% | 12.18% | -5.92% | |
77 Outperform | $88.78B | 32.47 | 51.23% | 0.38% | 14.29% | -1.20% | |
75 Outperform | $29.70B | 8.89 | 12.59% | ― | 8.85% | 33.30% | |
73 Outperform | $83.78B | 16.03 | 7.00% | 4.02% | 4.84% | -26.54% | |
72 Outperform | $85.81B | 15.52 | -230.22% | 0.76% | 7.30% | 11.60% | |
68 Neutral | $36.20B | 23.74 | -43.80% | 1.32% | 0.78% | 183.45% | |
52 Neutral | $5.23B | 3.70 | -41.86% | 2.84% | 16.58% | -0.16% |
* Healthcare Sector Average
Performance Comparison
MCK
McKesson
690.25
137.68
24.92%
COR
Cencora
283.77
61.17
27.48%
CAH
Cardinal Health
147.27
50.93
52.86%
CNC
Centene
62.42
-15.23
-19.61%
CVS
CVS Health
67.85
14.63
27.49%
HCA
HCA Healthcare
353.92
34.59
10.83%
McKesson Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q4-2025)
| % Change Since: 0.00%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with record revenue and EPS growth, strategic acquisitions, and robust shareholder returns. However, there are challenges related to business divestitures, regulatory uncertainties, and the planned separation of the medical surgical segment.Q4-2025 Updates
Positive Updates
Record Revenue Growth
Full-year consolidated revenues grew 16% from the prior year, reaching a record level of $359 billion.
Strong Earnings per Share
Adjusted earnings per diluted share was $33.05, exceeding expectations with a year-over-year EPS growth of 20%.
Strategic Acquisitions
Completed acquisition of a controlling interest in PRISM Vision and pending acquisition of Core Ventures, enhancing oncology and specialty capabilities.
U.S. Pharmaceutical Segment Performance
Double-digit growth in revenue and adjusted operating profits, driven by increased prescription volumes and specialty products.
Prescription Technology Solutions Growth
Segment delivered double-digit growth in adjusted operating profit, supported by demand for access and affordability solutions.
Strong Cash Flow and Shareholder Returns
Generated $5.2 billion in free cash flow and returned $3.5 billion to shareholders.
Fiscal 2026 Guidance
Projected revenue growth of 11% to 15% and EPS growth of 11% to 14% for fiscal 2026.
Negative Updates
Divestitures Impacting International Segment
Lower contributions in the international segment due to the divestiture of Canada-based Rexall and Well.ca businesses.
Medical Surgical Segment Separation
Announced intent to separate the medical surgical segment into an independent company, raising uncertainty about future structure.
Regulatory and Tariff Uncertainties
Potential impact of Medicare Part B MFN and tariffs on the overall business environment.
International Segment Revenue Decline
Expected revenue decline of 2% to growth of 2% and flat to 5% decline in operating profits for the international segment.
Company Guidance
During McKesson's earnings call for the fourth quarter of fiscal 2025, the company reported several key metrics reflecting its strong financial performance and future guidance. Full-year consolidated revenues increased by 16% year-over-year, reaching an unprecedented $359 billion. Adjusted earnings per diluted share stood at $33.05, marking a 20% growth, which surpassed the long-term targets of 12% to 14% EPS growth. McKesson returned $3.5 billion in cash to shareholders and projected fiscal 2026 revenue growth between 11% and 15%, with earnings per diluted share expected to range from $36.75 to $37.55, representing 11% to 14% growth year-over-year. The call also highlighted strategic acquisitions, such as PRISM Vision and Core Ventures, and the intent to separate the medical surgical segment into an independent company to further focus on oncology and biopharma services.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.