McKesson Reports Strong Q1 FY26 Results, Boosts Full-Year EPS Guidance on Solid Revenue Growth and Strategic Acquisitions
McKesson Corporation one of the world’s leading healthcare services and pharmaceutical distribution companies, reported robust results for the first quarter of its fiscal year 2026, ended June 30, 2025. The company posted strong revenue growth, completed strategic acquisitions in key growth segments, raised its quarterly dividend, and lifted its full-year adjusted earnings per share (EPS) guidance—signaling management’s confidence in continued strong performance across the enterprise.
Q1 FY26: Revenue Surges 23% to Nearly $98 Billion
McKesson reported consolidated revenues of $97.8 billion for the first quarter, representing a 23% year-over-year increase. This growth was largely driven by the continued strength of its U.S. Pharmaceutical segment, where increased prescription volumes from national retail accounts and expansion in oncology and specialty product distribution provided strong momentum.
The company noted that recent acquisitions—including controlling interests in PRISM Vision Holdings, LLC and Core Ventures—also contributed to the revenue increase. These deals reflect McKesson’s broader strategic push to deepen its capabilities in specialty care, particularly oncology and ophthalmology, and to strengthen its competitive positioning in the U.S. healthcare ecosystem.
Adjusted EPS Up 5%, GAAP EPS Declines Due to Rite Aid Bankruptcy Impact
Despite robust revenue growth, McKesson’s GAAP earnings per diluted share fell to $6.25, a $0.75 decrease compared to the same quarter last year. The decline was attributed primarily to a one-time pre-tax charge of $189 million within the U.S. Pharmaceutical segment. This increase in bad debt provision was linked to the bankruptcy of pharmacy chain Rite Aid, which impacted financial performance under generally accepted accounting principles (GAAP).
On an adjusted basis, however, McKesson delivered earnings per diluted share of $8.26, up 5% from $7.88 in the year-ago quarter. This growth was fueled by strong operational performance across all major business segments. However, it was partially offset by a higher tax rate and the absence of one-time equity investment gains that benefited the prior year’s results. In Q1 FY25, McKesson Ventures had contributed pre-tax gains of $110 million, a tailwind not repeated in the current quarter.
Full-Year FY26 EPS Guidance Raised, Reflects Double-Digit Growth Outlook
Following the strong start to the fiscal year, McKesson raised its full-year FY26 adjusted EPS guidance range to $37.10 to $37.90, up from its previous range of $36.90 to $37.70. The updated forecast now reflects expected year-over-year growth of 12% to 15%. Importantly, when excluding the prior-year net gains from equity investments, the adjusted EPS outlook suggests a growth range of 14% to 17%.
The company does not provide GAAP EPS guidance due to the unpredictability of certain non-operational items, such as investment gains or losses, that can significantly skew reported figures.
CEO Commentary: Strategic Execution Driving Momentum
McKesson CEO Brian Tyler praised the company’s strong performance and reaffirmed its strategic focus. “McKesson had a standout quarter with momentum and growth across the enterprise,” Tyler said. “We continue to execute against our strategy, delivering for our customers, partners, and patients.”
He emphasized the significance of closing the acquisitions of PRISM Vision Holdings and Core Ventures, which further deepen McKesson’s capabilities in high-growth therapeutic areas like oncology and ophthalmology. He also referenced the company’s decision to divest its Norwegian retail and distribution operations as part of an ongoing portfolio optimization strategy.
“As a result of the strong first quarter performance and our confidence in the outlook for the remainder of the year, which includes the announced sale of our Norwegian businesses, we are raising our fiscal 2026 Adjusted Earnings per Diluted Share guidance,” Tyler added.
Dividend Boost: Ninth Consecutive Year of Increases
In a show of confidence and shareholder commitment, McKesson’s Board of Directors approved a 15% increase in the company’s quarterly dividend—from $0.71 to $0.82 per share. The increase, announced on July 29, 2025, marks the ninth consecutive year the company has raised its dividend payout, reinforcing McKesson’s consistent capital return strategy.
Strategic Acquisitions Expand Specialty and Oncology Footprint
The company made significant strides in expanding its specialty healthcare platform in Q1 FY26. On April 1, McKesson closed its acquisition of an 80% controlling interest in PRISM Vision Holdings, a key player in ophthalmology and retina management services.
On June 2, McKesson completed the acquisition of a 70% controlling interest in Core Ventures—a business and administrative services firm established by the Florida Cancer Specialists & Research Institute (FCS). This deal brought FCS into McKesson’s US Oncology Network, increasing the network’s total provider count to approximately 3,300, strengthening its reach in community-based oncology care.
In a further move to streamline its international portfolio, McKesson announced on August 4 that it had entered into a definitive agreement to sell its retail and distribution operations in Norway to NorgesGruppen. The deal is subject to customary regulatory approvals.
Segment Highlights
U.S. Pharmaceutical Segment:
- Revenue: $90.0 billion (up 25%)
- Adjusted Operating Profit: $950 million (up 17%)
- Growth drivers included expanded prescription volumes from national retail accounts and increased distribution of oncology and specialty products.
- Operating profit was affected by the $189 million provision related to Rite Aid’s bankruptcy, which impacted GAAP results but not adjusted figures.
Prescription Technology Solutions:
- Revenue: $1.4 billion (up 16%)
- Adjusted Operating Profit: $269 million (up 21%)
- Growth driven by increased volumes in third-party logistics and higher demand for technology-driven access solutions.
Medical-Surgical Solutions:
- Revenue: $2.7 billion (up 2%)
- Adjusted Operating Profit: $244 million (up 22%)
- Revenue was supported by higher volumes of specialty pharmaceuticals, while profit margins benefited from cost optimization and efficiency gains.
International Segment:
- Revenue: $3.7 billion (up 1%)
- Adjusted Operating Profit: $99 million (down 3%)
- Revenue growth was modest, reflecting increased volumes in Canadian pharmaceutical distribution, offset by the divestiture of Canada-based Rexall and Well.ca retail businesses.
Capital Deployment: Share Buybacks, Dividends, and Investments
In Q1 FY26, McKesson returned $671 million to shareholders, including $581 million in share repurchases and $90 million in dividend payments. Over the same period, the company used $918 million in operating cash, invested $189 million in capital expenditures, and generated negative free cash flow of $1.1 billion. Notably, McKesson also invested $3.4 billion in acquisitions during the quarter, underscoring its aggressive investment in future growth areas.
