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MCKESSON CORP (MCK)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 was strong on profitability: Adjusted EPS $10.12, up 64% YoY, and above S&P Global consensus by $0.29; revenue was $90.8B (+19% YoY) but missed consensus by ~$3.4B . Consensus: EPS $9.83*, Revenue $94.20B*.
  • Management initiated FY2026 Adjusted EPS guidance of $36.75–$37.55 (11%–14% growth; 13%–16% ex-ventures gains), raised long-term U.S. Pharmaceutical Adjusted AOP target to 6%–8%, and announced intent to separate Medical-Surgical Solutions into an independent company .
  • Operational drivers: strong specialty/oncology volumes; GLP-1 revenues remained high ($10.9B); RxTS (“Prescription Technology Solutions”) demand aided by prior authorization growth (+15% YoY) and record annual verification activity (3M patients supported) .
  • Strategic catalysts likely to drive stock narrative: Medical-Surgical separation (portfolio focus, value unlock), oncology platform expansion (PRISM closure, Core Ventures pending), and AI/automation initiatives to modernize operations .

What Went Well and What Went Wrong

What Went Well

  • Strong EPS beat: Adjusted EPS $10.12 vs $9.83* consensus; driven by a lower tax rate (effective tax 13% in Q4) and broad operational growth, particularly U.S. Pharma and RxTS; management: “lower effective tax rate and strong operational growth” . Consensus: EPS $9.83*.
  • Specialty/oncology momentum: U.S. Pharma revenues +21% to $83.2B, adjusted segment OP +17% to $1.1B; RxTS adjusted segment OP +34% to $285M; GLP-1 revenues ~$10.9B; prior auth volumes +15% YoY .
  • Portfolio strategy clarity: Announced intent to separate Medical-Surgical into “NewCo,” focusing MCK on higher-growth oncology and biopharma solutions; CEO: “unlock significant value… focus capital deployment on higher growth” .

What Went Wrong

  • Top-line below consensus: Revenue $90.8B vs $94.2B* consensus; international revenue declined (-2%) on Canada retail divestiture; gross profit growth modest (+2%) due to mix and divestitures . Consensus: Revenue $94.20B*.
  • Medical-Surgical still mixed: Q4 revenues +1% to $2.9B; growth offset by primary care softness; illness season only modestly above Q3 levels; improvement mainly from cost optimization savings (~$100M 2H) .
  • Ongoing legal/regulatory overhangs: opioid-related charges (FY25 pre-tax $114M), MFN rumors for Medicare Part B created investor questions; management expects fair compensation and limited near-term impact .

Financial Results

Quarterly Progression

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$93.7 $95.3 $90.8
Adjusted EPS ($USD)$7.07 $8.03 $10.12
Adjusted Operating Profit ($USD Billions)$1.3 $1.5 $1.56

Year-over-Year (Q4 YoY)

MetricQ4 2024Q4 2025
Revenue ($USD Billions)$76.4 $90.8
Net Income ($USD Millions)$791 $1,260
GAAP Diluted EPS ($USD)$6.02 $10.01
Adjusted Earnings ($USD Millions)$813 $1,274
Adjusted EPS ($USD)$6.18 $10.12

Actual vs S&P Global Consensus (Q4 2025)

MetricConsensus*ActualSurprise
Adjusted EPS ($USD)$9.83*$10.12 +$0.29
Revenue ($USD Billions)$94.20*$90.82 -$3.38B

Values retrieved from S&P Global.*

Segment Breakdown

SegmentQ4 2024 Revenue ($MM)Q3 2025 Revenue ($MM)Q4 2025 Revenue ($MM)Q4 2024 Adj. OP ($MM)Q3 2025 OP ($MM)Q4 2025 Adj. OP ($MM)
U.S. Pharmaceutical68,790 87,100 83,166 901 944 1,052
RxTS1,180 1,400 1,339 212 235 285
Medical-Surgical2,837 2,900 2,853 248 294 285
International3,548 3,900 3,461 94 124 102

KPIs

KPIQ2 2025Q3 2025Q4 2025
GLP-1 Revenues ($USD Billions)$10.4 $10.9 $10.9
Prior Authorizations Initiated (YoY change, %)——15%
Annual Verification Patients Supported (count)——3,000,000
Free Cash Flow in Quarter ($USD Billions)$1.9 -$2.6 $7.5

Margin Notes

  • Segment margin metrics (Q4 2025): RxTS adjusted OP margin 21.28% vs 17.97% prior-year; U.S. Pharma 1.26%; Medical-Surgical 9.99%; International 2.95% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY2026n/a$36.75–$37.55 Initiated
Consolidated Revenue GrowthFY2026n/a11%–15% Initiated
Consolidated Operating Profit GrowthFY2026n/a8%–12% Initiated
U.S. Pharma Revenue & OP GrowthFY2026n/a12%–16% Initiated
RxTS Revenue GrowthFY2026n/a4%–8% Initiated
RxTS Operating Profit GrowthFY2026n/a9%–13% Initiated
Medical-Surgical Revenue & OP GrowthFY2026n/a2%–6% Initiated
International RevenueFY2026n/a-2% to +2% Initiated
International Operating ProfitFY2026n/aFlat to -5% Initiated
Corporate ExpensesFY2026n/a$570–$630M Initiated
Interest ExpenseFY2026n/a$255–$275M Initiated
Noncontrolling InterestsFY2026n/a$215–$235M Initiated
Effective Tax RateFY2026n/a17%–19% Initiated
Free Cash FlowFY2026n/a$4.4–$4.8B Initiated
Share RepurchasesFY2026n/a~$2.5B Initiated
Long-term Adjusted EPS GrowthLT12%–14% 12%–14% Maintained
Long-term U.S. Pharma Adjusted AOP GrowthLT5%–7% 6%–8% Raised
Quarterly DividendCurrent$0.71 $0.71 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
AI/TechnologyOntada–Microsoft Azure AI to process 150M oncology documents Automation and AI; CoverMyMeds virtual assistant automating >20% of chats Continued investment in AI/automation to modernize and accelerate enterprise Expanding
Supply Chain/SourcingClarusONE stability; InspiroGene commercialization platform Strong sourcing program, broad supplier base Stable capabilities; focus on efficiency and availability Stable
Tariffs/Macro——Tariff risk monitored; no material impact expected to FY26 outlook; diversified sourcing Low impact
GLP-1 Category$10.4B revenue; variability expected $10.9B revenue $10.9B revenue; prior auth volumes +15% YoY Strong, volatile
Regulatory/LegalCanada retail held-for-sale accretion; opioid litigation context —MFN Medicare Part B rumor discussed; expect fair compensation; opioid charges in FY25 Watchful
Portfolio ActionsRexall/Well.ca divestiture announced PRISM acquisition signed; Medical-Surgical cost optimization Intent to separate Medical-Surgical; PRISM closed; Core Ventures expected June 2025 Active
Regional Trends (Canada)Canadian distribution growth expected Revenues +6%, OP +18% Q4 revenues -2% YoY due to divestiture; adjusted OP +9% Mixed post-divestiture

Management Commentary

  • “McKesson delivered strong fourth quarter performance… revenue growth of 19% and Adjusted EPS growth of 64%” — Brian Tyler, CEO .
  • “Announcing our intent to separate the Medical-Surgical Solutions segment into an independent company… designed to unlock significant value” — Brian Tyler, CEO .
  • “We delivered earnings per diluted share of $10.12 in the fourth quarter and $33.05 for the full year” — Britt Vitalone, CFO .
  • “We anticipate FY2026 Adjusted EPS of $36.75 to $37.55” — Britt Vitalone, CFO .
  • “GLP-1 revenues were $10.9B… prior authorization volume increased by 15% in the quarter” — Britt Vitalone, CFO .
  • “Leverage technology, automation and AI… enhance our financial profile” — Brian Tyler, CEO .

Q&A Highlights

  • MFN/Medicare Part B concern: Management emphasized no formal announcement, potential legal challenges, and expectation of fair compensation for distributor services and community oncology providers .
  • Tariffs: Diversified sourcing across geographies; no material impact assumed in FY2026 guidance .
  • Capital deployment urgency (MSOs/biopharma services): Strategy-driven, financially disciplined; urgency unchanged, valuations dictate timing .
  • RxTS dynamics: 3PL revenue growth rate slowing vs FY25 but access/affordability solutions strong; 3PL ~50% of segment revenue but <5% of OP .
  • Med-Surg: Cost optimization delivering ~$100M 2H FY25 savings; primary care volumes remain soft; separation designed to enhance focus and value .

Estimates Context

  • Q4 FY2025 vs S&P Global consensus: EPS beat (+$0.29) driven by lower effective tax rate and operational strength; revenue miss (~$3.4B) amid mix (international divestitures) and Med-Surg primary care softness . Consensus: EPS $9.83*, Revenue $94.20B*.
  • Implications: Street may raise FY2026 EPS estimates toward $36.75–$37.55 guidance; segment-level revisions likely positive for U.S. Pharma and RxTS; cautious on Med-Surg until separation details emerge .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EPS quality strong; Q4 beat on Adjusted EPS with tax and operations; watch sustainability of tax rate and specialty volume mix .
  • Portfolio re-rating potential: Medical-Surgical separation sharpens focus on higher-growth oncology/biopharma solutions and may unlock value .
  • Oncology platform expansion is tangible (PRISM closed, Core Ventures pending), with incremental EPS accretion in FY2026 ($0.60–$0.90 combined) and raised long-term U.S. Pharma AOP growth target to 6%–8% .
  • RxTS remains a growth engine; prior authorization and access solutions accelerating, while 3PL growth normalizes; margin leverage intact .
  • GLP-1 remains a volume tailwind across distribution and access programs, but quarterly variability persists; maintain conservative quarterly modeling .
  • Canadian distribution resilient post retail divestiture; expect stable contributions while Norway exit proceeds; limited impact to FY2026 .
  • Near-term trading lens: Potential positive sentiment from separation and FY2026 guide; monitor MFN headlines and tariff policy as downside risks, though management sees limited near-term impact .