McKesson Reports Q3 Fiscal 2025 Results, Raises Full-Year EPS Guidance
McKesson Corporation (NYSE: MCK) announced its third-quarter results for the fiscal year 2025, showing strong growth across various segments. The company reported revenues of $95.3 billion for the quarter, a significant 18% increase compared to the same period last year. This growth was driven by increased prescription volumes, particularly from retail national accounts, specialty products, and the oncology platform.
The company’s earnings per diluted share (EPS) for the third quarter was $6.95, a notable increase of $2.53 from the previous year. Adjusted EPS, which excludes certain items, was $8.03, reflecting a 4% increase from the prior year, primarily due to strong operational growth and a lower share count, despite a higher tax rate.
Brian Tyler, CEO of McKesson, expressed satisfaction with the company’s strong operational results, which reflected broad-based revenue growth of 18% and adjusted operating profit growth of 16%. He attributed the performance to McKesson’s enterprise-wide momentum and growth strategy, which includes expanding in oncology and biopharma services. Tyler also raised the company’s full-year adjusted EPS guidance to a range of $32.55 to $32.95, indicating a 19% to 20% growth compared to the previous year.
In addition to strong financial results, McKesson highlighted several key business developments during the quarter. The company announced a definitive agreement to acquire a controlling interest in PRISM Vision Holdings, LLC, a leading provider of general ophthalmology and retina management services. The acquisition aims to enhance McKesson’s position in community practice management and specialty solutions, especially in the rapidly growing field of retinal care.
McKesson also closed the transaction to sell its Canada-based Rexall and Well.ca retail businesses on December 30, 2024, as part of its ongoing portfolio optimization strategy. These moves reflect the company’s continued focus on expanding its suite of healthcare solutions while strategically managing its non-core assets.
Fiscal 2025 Third-Quarter Segment Performance
- U.S. Pharmaceutical Segment: The U.S. Pharmaceutical segment posted revenues of $87.1 billion, an increase of 19%. This growth was driven by higher prescription volumes, including those from retail national accounts and specialty products. The segment’s operating profit was $854 million, with adjusted operating profit rising by 14% to $944 million due to strong performance in the distribution of specialty products.
- Prescription Technology Solutions Segment: This segment achieved revenues of $1.4 billion, reflecting a 14% increase, primarily driven by higher prescription volumes in third-party logistics and technology services. Adjusted segment operating profit grew 22%, reaching $235 million, due to growth in access and affordability solutions.
- Medical-Surgical Solutions Segment: The Medical-Surgical Solutions segment saw a 3% decline in revenues, totaling $2.9 billion. The drop was mainly attributed to lower contributions from illness-season vaccines and testing in the primary care channel. However, the segment’s adjusted operating profit increased by 4% to $294 million, driven by operational efficiencies from cost optimization efforts.
- International Segment: McKesson’s International segment, primarily focused on the Canadian market, generated revenues of $3.9 billion, an increase of 6%. This growth was attributed to higher pharmaceutical distribution volumes in Canada. The segment’s adjusted operating profit rose by 18% to $124 million, benefiting from the discontinued depreciation and amortization related to the Rexall and Well.ca businesses, which were sold during the quarter.
Business Updates and Strategic Moves
McKesson also made significant moves in its leadership and business strategy. On February 3, 2025, the company announced the election of two new directors to its board: Lynne Doughtie and Dr. Julie Gerberding. Doughtie, the former CEO of KPMG U.S., brings deep accounting and finance expertise, while Dr. Gerberding, former CDC Director and Merck executive, adds significant healthcare industry and public policy experience.
The acquisition of an 80% controlling interest in PRISM Vision Holdings aligns with McKesson’s strategy to further its leadership in specialty care solutions, particularly in ophthalmology. This deal will allow McKesson to build a leading platform for retinal care, leveraging its existing capabilities in practice management and clinical research. The transaction is expected to close after customary regulatory approvals.
Cash Returns and Investment Activities
During the first nine months of fiscal 2025, McKesson returned $3.1 billion to shareholders, including $2.8 billion in stock repurchases and $254 million in dividend payments. The company also used $1.7 billion in cash from operations and invested $581 million in capital expenditures, resulting in a negative free cash flow of $2.2 billion during the same period.
Fiscal 2025 Outlook
McKesson raised its full-year fiscal 2025 adjusted EPS guidance to a range of $32.55 to $32.95, up from the previous range of $32.40 to $33.00. The updated guidance reflects a 19% to 20% growth compared to the prior year. The company continues to focus on growth within its core segments, including oncology and biopharma services, while expanding its offerings in retinal and ophthalmic care through the PRISM Vision acquisition.
The company does not provide guidance on GAAP earnings per diluted share due to the complexity of forecasting certain adjustments, including LIFO inventory-related matters, litigation losses, and other one-time items.
