MCK Q1 2026: EPS up $0.20 on Norway sale; US Pharma guidance unchanged
- Strong Performance in Prescription Technology Solutions: Management highlighted that the RxTS segment continues to deliver consistent operating performance driven by robust utilization and effective prior authorization programs (including for GLP-1s), indicating a stable revenue growth engine.
- Resilient U.S. Pharmaceutical Fundamentals: During Q&A, executives stressed that challenges such as the Rite Aid bankruptcy have been immaterial, while new strategic acquisitions and ongoing provider onboarding are fueling double-digit growth in operating profit, supporting a bullish outlook for core pharma.
- Efficiency Through Automation and Cost Optimizations: The call emphasized ongoing investments in technology and automation initiatives that are enhancing productivity and driving down operating expenses, translating into improved operating leverage over the long term.
- Tariff and Supply Chain Risks: Tariff uncertainties remain, as noted by management, and any future unexpected increases or shifts in these policies could eventually disrupt costs and margins despite current expectations of delay in impact.
- Integration and Execution Challenges: The recent acquisitions of Prism Vision and Core Ventures, while expected to drive 6%–7% operating profit growth, pose integration risks that could delay or limit the anticipated benefits.
- Dependence on One-off Items: The raised full-year guidance relies partly on the positive accounting impact from the Norway sale. Any delays or unfavorable outcomes in this transaction could adversely affect overall results.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Earnings Per Diluted Share (EPS) ($USD) | FY 2026 | no prior guidance | $37.1 to $37.9 (updated from $36.9 to $37.7) | no prior guidance |
Revenue Growth (%) | FY 2026 | no prior guidance | 11% to 15% compared to the prior year | no prior guidance |
Operating Profit Growth (%) | FY 2026 | no prior guidance | 9% to 13% compared to the prior year | no prior guidance |
U.S. Pharmaceutical Segment Revenue Growth (%) | FY 2026 | no prior guidance | 12% to 16% | no prior guidance |
U.S. Pharmaceutical Segment Operating Profit Growth (%) | FY 2026 | no prior guidance | High end of 12% to 16% range | no prior guidance |
International Segment Operating Profit ($USD) | FY 2026 | no prior guidance | Includes $0.20 contribution from Norway operations | no prior guidance |
Corporate Segment Expenses ($USD Millions) | FY 2026 | no prior guidance | $570 to $630 | no prior guidance |
Interest Expense ($USD Millions) | FY 2026 | no prior guidance | $260 to $290 | no prior guidance |
Income Attributable to Non-Controlling Interest ($USD Millions) | FY 2026 | no prior guidance | $215 to $235 | no prior guidance |
Effective Tax Rate (%) | FY 2026 | no prior guidance | 17% to 19% (First half: 17% to 20%, Second half: 16% to 19%) | no prior guidance |
Free Cash Flow ($USD Billions) | FY 2026 | no prior guidance | $4.4 to $4.8 | no prior guidance |
Share Repurchases ($USD Billions) | FY 2026 | no prior guidance | $2.5 | no prior guidance |
Weighted Average Diluted Shares Outstanding (Millions) | FY 2026 | no prior guidance | 124 to 125 | no prior guidance |
Dividend (%) | FY 2026 | no prior guidance | 15% increase to quarterly dividend | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Prescription Technology Solutions | Discussed as a strategic growth pillar with strong revenue and operating profit growth, enhanced by platform development and key acquisitions. | Reported 16% revenue growth with a stronger emphasis on GLP-1 related prior authorization programs and solid 3PL performance. | Continued robust growth with increased focus on GLP-1 programs and reliable 3PL performance. |
Automation Investments | Emphasized in Q3 2025 and Q2 2025 as key drivers for operating expense improvements through automation, leveraging data capabilities and technology investments. | Highlighted advanced initiatives (e.g., mobile autonomous robots, cold chain enhancements) that contributed to a 450 basis points improvement in operating expense ratios. | Sustained high priority with deeper technological integration and further operating efficiency improvements. |
GLP-1 Medications | Noted in Q3 2025 with strong revenue growth ($10.9 billion, 45% increase) and in Q2 2025 as a major driver amid volatility and margin pressures. | Reported at $12.1 billion in revenue, a 38% increase, with continued strong growth driven by increased prescription volumes and acknowledged quarterly variability. | Consistently strong growth with persistent volatility risks; management remains optimistic yet cautious. |
Oncology Platform Expansion | In Q3 2025, the network expansion (over 2,750 providers) and clinical trial services were emphasized; Q2 2025 highlighted major acquisitions such as Florida Cancer. | Q1 2026 detailed the acquisition of Core Ventures and integration of Prism Vision, expanding the network to around 3,300 providers while accelerating growth in oncology. | Steady expansion with deeper integration of new assets and a strengthened oncology platform. |
Value-Based Care Models | Q2 2025 mentioned explicit participation in government programs and value-based initiatives (e.g., through Florida Cancer), with indirect alignment noted in Q3 2025. | Not explicitly mentioned in Q1 2026, though oncology strategy and enhanced patient care models imply alignment with value-based care principles. | Explicit mention has decreased, but underlying principles persist in the broader strategic approach. |
Operational Efficiency, Data Analytics, and Cost Optimizations | Q3 2025 focused on operating expense improvements (over 250 basis points), cost optimization initiatives ($100 million savings goal), and strengthening data analytics ; Q2 2025 noted an 800 basis points improvement and investments in automation and data capabilities. | Q1 2026 reported further automation (e.g., automated systems and AI enhancements), cold chain expansion, and significant cost optimization measures, including a 450 basis point improvement. | Ongoing momentum with advanced automation and enhanced cost discipline across segments. |
Resilient U.S. Pharmaceutical Fundamentals and Distribution Stability | Q3 2025 reported 19% revenue growth, stable prescription volumes, and strategic customer additions; Q2 2025 highlighted 21% growth and solid operational performance. | Q1 2026 noted a 25% revenue increase, improved operating profit, and robust performance partly driven by strategic acquisitions and strong prescription volume growth. | Increasing strength and stability, reflecting a resilient core business with expanding growth metrics. |
Acquisition Integration and Execution Challenges | Q3 2025 had limited discussion on integration challenges and minimal focus on execution issues; Q2 2025 did not provide specific details [N/A]. | Q1 2026 included detailed discussion on the integration complexities of Florida Cancer Specialists/Core Ventures and ongoing challenges with the Prism Vision integration. | Emerging focus on integration complexities as acquisitions mature, highlighting execution challenges that require strong cross-team collaboration. |
Tariff and Supply Chain Risks | Q2 2025 mentioned diversified supplier bases mitigating tariff risks, while Q3 2025 did not address this topic. | Q1 2026 discussed tariff volatility and uncertainty but reassured that sufficient supply chain inventory buffers exist to mitigate near-term economic impacts. | Increased emphasis on tariff uncertainty in the current period while supply chain resilience remains a key strength. |
Medical-Surgical Solutions Volume and Cost Management Challenges | Q3 2025 highlighted lower illness season volumes, weak primary care channels, and active cost optimization initiatives; Q2 2025 reported post-COVID normalization issues and cost programs targeting $100 million savings. | Q1 2026 reported modest revenue growth (2%) with a 22% increase in operating profit, reflecting effective cost management and improved volume performance in specialty pharmaceuticals. | Improved recovery and cost management in Q1 2026 compared to the volume challenges and softness observed in prior periods. |
Dependence on One-Off Accounting Items | Q2 2025 mentioned minor one-off effects from held-for-sale accounting and venture losses; Q3 2025 did not address the topic explicitly. | Q1 2026 noted one-off items such as the Rite Aid bankruptcy provision and differences in McKesson Ventures gains, though these were not major drivers of performance. | Still present but less emphasized; the focus remains on core operational performance rather than one-off accounting events. |
Strategic Limitations in U.S. Pharmacies and Hospital Distribution | Q2 2025 explicitly discussed strategic decisions against owning U.S. retail pharmacies and the exit from acute care hospital distribution, citing conflicts and misaligned margins ; Q3 2025 did not mention limitations. | Q1 2026 did not mention these limitations, suggesting that the previous strategic stance remains in place and is less of a focal point in current discussions [N/A]. | Reduced emphasis in the current period, indicating that the strategic limitations remain unchanged and are not a pressing issue. |
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Guidance Details
Q: How do Norway sale and pharma guidance break down?
A: Management explained the $0.20 boost is solely from the Norway sale while guidance for segments like US Pharma remains robust and unchanged. -
RxTS Upside
Q: Is RxTS upside limited for H2?
A: They noted consistent performance driven by strong utilization, with guidance largely set and potential upside emerging in later quarters. -
OpEx Impact
Q: Can tech and automation lower operating expenses?
A: The CFO emphasized that ongoing automation and process improvements are driving better cost control and operating expense leverage. -
Specialty Growth
Q: Is specialty growth due to market share gains?
A: The CEO highlighted that growth is fueled by organic expansion and strategic acquisitions, steadily expanding their specialty footprint. -
Biosimilar Growth
Q: Are biosimilars materially impacting margins?
A: Management stated that biosimilars are contributing steadily over the long term but are not having a material immediate margin impact. -
Pricing & Tariffs
Q: Are pricing or tariffs affecting margins?
A: They confirmed that brand pricing remains in line with expectations and that tariffs are not currently affecting the overall economics. -
Rite Aid Impact
Q: Do Rite Aid closures affect core pharma?
A: The CFO reassured investors that the impact from Rite Aid is immaterial and should not materially disrupt core operations. -
MSN Impact
Q: Should we worry about changes in MSN cadence?
A: The CEO maintained that the fundamentals in US oncology remain strong, with any shifts expected to unfold over a long time horizon. -
Uninsured Impact
Q: Will rising uninsured rates lower demand?
A: He mentioned that potential increases in uninsured rates are diffuse and unlikely to have a material impact on overall demand. -
Platform Strategy
Q: How do FCS and Prism fit into strategy?
A: The CEO explained both platforms offer fit-for-purpose solutions and, while distinct today, may eventually benefit from shared insights without compromising their individual strategies.
Research analysts covering MCKESSON.