MCK 10-Q: Smart Summary
§ Financial statements
Consolidated Statements of Operations
| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Revenues | $ | 103,150 | $ | 93,651 | $ | 200,977 | $ | 172,934 | |||||||||||||||||||||
| Cost of sales | (99,608) | (90,403) | (194,156) | (166,534) | |||||||||||||||||||||||||
| Gross profit | 3,542 | 3,248 | 6,821 | 6,400 | |||||||||||||||||||||||||
| Selling, distribution, general, and administrative expenses | (2,074) | (2,503) | (4,270) | (4,504) | |||||||||||||||||||||||||
| Claims and litigation charges, net | 2 | 4 | 2 | (108) | |||||||||||||||||||||||||
| Restructuring, impairment, and related charges, net | (63) | (171) | (110) | (181) | |||||||||||||||||||||||||
| Total operating expenses | (2,135) | (2,670) | (4,378) | (4,793) | |||||||||||||||||||||||||
| Operating income | 1,407 | 578 | 2,443 | 1,607 | |||||||||||||||||||||||||
| Other income, net | 62 | 34 | 126 | 164 | |||||||||||||||||||||||||
| Interest expense | (74) | (78) | (123) | (153) | |||||||||||||||||||||||||
| Income before income taxes | 1,395 | 534 | 2,446 | 1,618 | |||||||||||||||||||||||||
| Income tax expense | (232) | (247) | (452) | (371) | |||||||||||||||||||||||||
| Net income | 1,163 | 287 | 1,994 | 1,247 | |||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (53) | (46) | (100) | (91) | |||||||||||||||||||||||||
| Net income attributable to McKesson Corporation | $ | 1,110 | $ | 241 | $ | 1,894 | $ | 1,156 | |||||||||||||||||||||
| Earnings per common share attributable to McKesson Corporation | |||||||||||||||||||||||||||||
| Diluted | $ | 8.92 | $ | 1.87 | $ | 15.16 | $ | 8.89 | |||||||||||||||||||||
| Basic | $ | 8.95 | $ | 1.88 | $ | 15.22 | $ | 8.94 | |||||||||||||||||||||
| Weighted-average common shares outstanding | |||||||||||||||||||||||||||||
| Diluted | 124.4 | 129.3 | 124.9 | 130.0 | |||||||||||||||||||||||||
| Basic | 124.0 | 128.7 | 124.5 | 129.3 | |||||||||||||||||||||||||
Consolidated Balance Sheets
| September 30, 2025 | March 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 4,004 | $ | 5,691 | |||||||
| Receivables, net | 28,286 | 25,643 | |||||||||
| Inventories, net | 26,134 | 23,001 | |||||||||
| Prepaid expenses and other | 1,463 | 1,063 | |||||||||
| Total current assets | 59,887 | 55,398 | |||||||||
| Property, plant, and equipment, net | 2,627 | 2,502 | |||||||||
| Operating lease right-of-use assets | 1,991 | 1,782 | |||||||||
| Goodwill | 11,283 | 10,022 | |||||||||
| Intangible assets, net | 4,220 | 1,464 | |||||||||
| Other non-current assets | 4,152 | 3,972 | |||||||||
| Total assets | $ | 84,160 | $ | 75,140 | |||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND DEFICIT | |||||||||||
| Current liabilities | |||||||||||
| Drafts and accounts payable | $ | 60,938 | $ | 55,330 | |||||||
| Current portion of long-term debt | 1,747 | 1,191 | |||||||||
| Current portion of operating lease liabilities | 278 | 258 | |||||||||
| Other accrued liabilities | 5,068 | 4,825 | |||||||||
| Total current liabilities | 68,031 | 61,604 | |||||||||
| Long-term debt | 6,011 | 4,463 | |||||||||
| Long-term deferred tax liabilities | 1,086 | 1,029 | |||||||||
| Long-term operating lease liabilities | 1,756 | 1,478 | |||||||||
| Long-term litigation liabilities | 5,103 | 5,601 | |||||||||
| Other non-current liabilities | 2,751 | 2,659 | |||||||||
| Redeemable noncontrolling interests | 777 | — | |||||||||
| McKesson Corporation stockholders’ deficit | |||||||||||
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding | — | — | |||||||||
Common stock, $0.01 par value, 800 shares authorized, 280 and 279 shares issued at September 30, 2025 and March 31, 2025, respectively | 3 | 3 | |||||||||
| Additional paid-in capital | 8,499 | 8,373 | |||||||||
| Retained earnings | 19,622 | 17,921 | |||||||||
| Accumulated other comprehensive loss | (908) | (932) | |||||||||
Treasury shares, at cost, 156 and 154 shares at September 30, 2025 and March 31, 2025, respectively | (28,955) | (27,439) | |||||||||
| Total McKesson Corporation stockholders’ deficit | (1,739) | (2,074) | |||||||||
| Noncontrolling interests | 384 | 380 | |||||||||
| Total deficit | (1,355) | (1,694) | |||||||||
Total liabilities, redeemable noncontrolling interests, and deficit | $ | 84,160 | $ | 75,140 | |||||||
Consolidated Statements of Cash Flows
| Six Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 1,994 | $ | 1,247 | |||||||
| Adjustments to reconcile to net cash provided by operating activities: | |||||||||||
| Depreciation | 124 | 124 | |||||||||
| Amortization | 221 | 208 | |||||||||
| Asset impairment charges | 4 | 76 | |||||||||
| Deferred taxes | (41) | 125 | |||||||||
Credits associated with last-in, first-out inventory method | (18) | (4) | |||||||||
| Non-cash operating lease expense | 140 | 113 | |||||||||
Gain from sales of businesses and investments | (85) | (89) | |||||||||
| Canadian businesses held for sale | — | 638 | |||||||||
| Provision for bad debts | 232 | (169) | |||||||||
| Other non-cash items | 169 | 174 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Receivables | (2,296) | (3,499) | |||||||||
| Inventories | (3,199) | (3,310) | |||||||||
| Drafts and accounts payable | 5,170 | 6,221 | |||||||||
| Operating lease liabilities | (152) | (196) | |||||||||
| Taxes | 121 | (145) | |||||||||
| Litigation liabilities | (657) | (386) | |||||||||
| Other | (225) | (408) | |||||||||
| Net cash provided by operating activities | 1,502 | 720 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Payments for property, plant, and equipment | (217) | (242) | |||||||||
| Capitalized software expenditures | (168) | (143) | |||||||||
| Acquisitions, net of cash, cash equivalents, and restricted cash acquired | (3,389) | (1) | |||||||||
| Proceeds from sales of businesses and investments, net | 133 | 93 | |||||||||
| Other | 53 | (80) | |||||||||
| Net cash used in investing activities | (3,588) | (373) | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from short-term borrowings | 2,275 | 6,876 | |||||||||
| Repayments of short-term borrowings | (2,275) | (6,876) | |||||||||
| Proceeds from issuances of long-term debt | 1,990 | 498 | |||||||||
| Repayments of long-term debt | (2) | (501) | |||||||||
| Common stock transactions: | |||||||||||
| Issuances | 50 | 54 | |||||||||
| Share repurchases | (1,399) | (2,019) | |||||||||
| Dividends paid | (179) | (162) | |||||||||
| Other | (245) | (278) | |||||||||
| Net cash provided by (used in) financing activities | 215 | (2,408) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 24 | 1 | |||||||||
| Change in cash, cash equivalents, and restricted cash classified as Assets held for sale | — | (14) | |||||||||
| Net decrease in cash, cash equivalents, and restricted cash | (1,847) | (2,074) | |||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 5,956 | 4,585 | |||||||||
| Cash, cash equivalents, and restricted cash at end of period | 4,109 | 2,511 | |||||||||
Less: Restricted cash at end of period included in Prepaid expenses and other | (105) | (2) | |||||||||
Cash and cash equivalents at end of period | $ | 4,004 | $ | 2,509 | |||||||
Consolidated Statements of Comprehensive Income
| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | 1,163 | $ | 287 | $ | 1,994 | $ | 1,247 | |||||||||||||||
Other comprehensive (loss) income, net of tax | |||||||||||||||||||||||
| Foreign currency translation adjustments | (5) | 34 | 16 | 3 | |||||||||||||||||||
Unrealized gain (loss) on cash flow and other hedges | (5) | (9) | 9 | (9) | |||||||||||||||||||
| Changes in retirement-related benefit plans | — | (2) | (1) | (3) | |||||||||||||||||||
Other comprehensive (loss) income, net of tax | (10) | 23 | 24 | (9) | |||||||||||||||||||
| Comprehensive income | 1,153 | 310 | 2,018 | 1,238 | |||||||||||||||||||
| Comprehensive income attributable to noncontrolling interests | (53) | (46) | (100) | (91) | |||||||||||||||||||
| Comprehensive income attributable to McKesson Corporation | $ | 1,100 | $ | 264 | $ | 1,918 | $ | 1,147 | |||||||||||||||
Notes to Financials
Note 11: Commitments and Contingent Liabilities
Boilerplate only. Nothing of substance to surface.
Note 13: Segments of Business
- New segment structure: Commencing in the second quarter of fiscal 2026, McKesson implemented a new four-reportable-segment structure: North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions (RxTS), and Medical-Surgical Solutions. The Company's Norwegian operations (now classified as held for sale) are included in Other. All prior segment information has been recast to reflect this new structure.
- CODM metric: The chief operating decision maker uses operating profit before interest expense and income taxes to assess performance and allocate resources; assets by segment are not reported as they are not a measure used by the CODM.
- Corporate and reconciling items: Corporate expenses, net — which includes administrative functions, project costs, and results of certain investments — reconciles segment operating profit subtotals to consolidated income before income taxes, along with interest expense. Notable items in Corporate for the periods include restructuring charges of $38M and $23M for the three months ended September 30, 2025 and 2024, respectively, and $67M and $24M for the six months ended September 30, 2025 and 2024, respectively.
- Significant segment-level items: North American Pharmaceutical other segment expense, net includes a $189M provision for bad debts related to Rite Aid for the six months ended September 30, 2025, and a $593M charge for the three and six months ended September 30, 2024 to remeasure the Canadian retail disposal group; Oncology & Multispecialty includes a net gain of $51M for the three and six months ended September 30, 2025 related to the sale of an investment; Medical-Surgical Solutions includes $144M of restructuring charges for the three and six months ended September 30, 2024.
in millions
| Line item | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical — Segment revenues | 86,481 | 80,018 | +8.1% |
| Oncology & Multispecialty — Segment revenues | 12,044 | 9,157 | +31.5% |
| Prescription Technology Solutions — Segment revenues | 1,376 | 1,265 | +8.8% |
| Medical-Surgical Solutions — Segment revenues | 2,947 | 2,946 | +0.0% |
| Other — Segment revenues | 302 | 265 | +14.0% |
| North American Pharmaceutical — Other segment expense, net | 85,629 | 79,671 | +7.5% |
| Oncology & Multispecialty — Other segment expense, net | 11,712 | 8,957 | +30.8% |
| Prescription Technology Solutions — Other segment expense, net | 1,132 | 1,060 | +6.8% |
| Medical-Surgical Solutions — Other segment expense, net | 2,727 | 2,855 | -4.5% |
| Other — Other segment expense, net | 274 | 252 | +8.7% |
| North American Pharmaceutical — Segment operating profit | 852 | 347 | +145.5% |
| Oncology & Multispecialty — Segment operating profit | 332 | 200 | +66.0% |
| Prescription Technology Solutions — Segment operating profit | 244 | 205 | +19.0% |
| Medical-Surgical Solutions — Segment operating profit | 220 | 91 | +141.8% |
| Other — Segment operating profit | 28 | 13 | +115.4% |
| North American Pharmaceutical — Segment depreciation and amortization | 32 | 43 | -25.6% |
| Oncology & Multispecialty — Segment depreciation and amortization | 71 | 37 | +91.9% |
| Prescription Technology Solutions — Segment depreciation and amortization | 20 | 22 | -9.1% |
| Medical-Surgical Solutions — Segment depreciation and amortization | 23 | 22 | +4.5% |
| Other — Segment depreciation and amortization | 1 | 5 | -80.0% |
| Corporate — Segment depreciation and amortization | 41 | 34 | +20.6% |
| North American Pharmaceutical — Segment expenditures for long-lived assets | 74 | 66 | +12.1% |
| Oncology & Multispecialty — Segment expenditures for long-lived assets | 23 | 19 | +21.1% |
| Prescription Technology Solutions — Segment expenditures for long-lived assets | 0 | 3 | -100.0% |
| Medical-Surgical Solutions — Segment expenditures for long-lived assets | 32 | 42 | -23.8% |
| Other — Segment expenditures for long-lived assets | 4 | 4 | +0.0% |
| Corporate — Segment expenditures for long-lived assets | 63 | 84 | -25.0% |
Management Discussion & Analysis
INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS
Boilerplate only. Nothing of substance to surface.
GENERAL
Boilerplate only. Nothing of substance to surface.
Overview of our Business:
- Business description: McKesson describes itself as a diversified healthcare services leader partnering with biopharma companies, care providers, pharmacies, manufacturers, and governments to deliver insights, products, and services aimed at making quality care more accessible and affordable.
- New segment structure: Commencing in the second quarter of fiscal 2026, McKesson implemented a new segment reporting structure with four reportable segments: North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions ("RxTS"), and Medical-Surgical Solutions; Norwegian operations are included in Other, and all prior segment information has been recast to reflect the new structure.
- Segment performance evaluation: Management evaluates operating segment performance on several measures including revenues and operating profit before interest expense and income taxes.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- North American Pharmaceutical: Provides distribution and logistics services for branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs and other healthcare-related products to wholesale and institutional customers in the U.S. and Canada; also sells financial, operational, and clinical solutions to pharmacies and provides consulting, outsourcing, technological, and other services. This segment was formed by combining U.S. distribution operations from the former U.S. Pharmaceutical segment and Canadian operations from the former International segment.
- Oncology & Multispecialty: Covers specialty drug distribution, group purchasing organizations, infusion services, direct to patient pharmacy capabilities, cell and gene therapy services (InspiroGene), technology solutions, practice consulting, vaccine distribution, and supports one of the largest networks of physician-led, integrated, community-based oncology practices in the U.S.; also includes PRISM Vision Holdings, LLC, Sarah Cannon Research Institute, and technology business Ontada. Previously reflected in the former U.S. Pharmaceutical reportable segment.
- Prescription Technology Solutions and Medical-Surgical Solutions: RxTS connects patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies via automation and technology services including electronic prior authorization, prescription price transparency, benefit insight, dispensing support, third-party logistics, and wholesale distribution. Medical-Surgical Solutions provides medical-surgical supply distribution, logistics, and other services to ambulatory care and extended care settings, and offers both national brand and McKesson's own product line; on May 8th, 2025, McKesson announced its intention to separate this segment into an independent company.
- Norway divestiture: Norwegian operations (distribution and services to wholesale and retail customers, including owned, partnered, or franchised retail pharmacies), previously in the former International segment and now in Other, were classified as held for sale during the six months ended September 30, 2025 following a definitive agreement to sell; the transaction is subject to customary closing conditions including required regulatory approvals.
Business Acquisitions and Divestitures
PRISM Vision Holdings, LLC
- Acquisition: On April 1, 2025, the company completed the acquisition of an 80% controlling interest in PRISM Vision, described as a leading provider of general ophthalmology and retina administrative services, for $871M in cash; prior owners, including management and physicians in PRISM Vision practices, retained the remaining 20% ownership interest.
- Segment reporting: As of the acquisition date, PRISM Vision's financial results are reported within the Oncology & Multispecialty segment.
Community Oncology Revitalization Enterprise Ventures, LLC
- Acquisition: On June 2, 2025, McKesson completed the acquisition of a 70% controlling interest in Community Oncology Revitalization Enterprise Ventures, LLC ("Core Ventures"), a business and administrative services organization established by Florida Cancer Specialists & Research Institute, LLC ("FCS"), for $2.5B in cash, with FCS physicians retaining the remaining 30% interest.
- Segment reporting: As of the acquisition date, Core Ventures is part of the Oncology platform and financial results are reported within the Oncology & Multispecialty segment.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Boilerplate only. Nothing of substance to surface.
Executive Summary:
- Revenue and profitability (Q2 FY2026): For the three months ended September 30, 2025, revenues increased 10%, gross profit increased 9%, total operating expenses decreased 20%, and other income, net increased $28M versus the prior year; for the six months ended September 30, 2025, revenues increased 16%, gross profit increased 7%, total operating expenses decreased 9%, and other income, net decreased $38M versus the prior year.
- Diluted EPS: Diluted earnings per common share attributable to McKesson Corporation increased to $8.92 from $1.87 for the three months ended September 30, 2025, and increased to $15.16 from $8.89 for the six months ended September 30, 2025, compared to the respective prior year periods.
- Acquisitions and bad debt: On April 1, 2025, McKesson completed the acquisition of a controlling interest in PRISM Vision for $871M in cash; on June 2, 2025, it completed the acquisition of a controlling interest in Core Ventures for $2.5B in cash; and for the six months ended September 30, 2025, the company recorded a provision for bad debts of $189M related to the bankruptcy of Rite Aid Corporation.
- Capital structure and shareholder returns: On May 30, 2025, McKesson completed a public debt offering of 4.65% Notes due May 30, 2030 ($650M), 4.95% Notes due May 30, 2032 ($650M), and 5.25% Notes due May 30, 2035 ($700M), for total net proceeds of $2B (used to fund the Core Ventures purchase); during the six months ended September 30, 2025, the company returned $1.6B to shareholders via $1.4B of common stock repurchases and $179M of dividend payments, with $6.1B of repurchase authorization remaining, and on July 29, 2025, the Board raised the quarterly dividend to $0.82 from $0.71 per common share.
Trends and Uncertainties:
Government Policies
Boilerplate only. Nothing of substance to surface.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
RESULTS OF OPERATIONS
Overview of Consolidated Results:
- Revenue growth: Revenues grew 10% to $103.2B in the three months ended September 30, 2025, and 16% to $201B in the six months ended September 30, 2025, compared to $93.7B and $172.9B in the prior-year periods, respectively.
- Gross profit margin compression: Gross profit margin declined 4 basis points to 3.43% in Q2 and 31 basis points to 3.39% in the six-month period, with gross profit of $3.5B (Q2) and $6.8B (six months).
- Operating expense leverage: Total operating expenses fell 20% to ($2.1B) in Q2 and 9% to ($4.4B) in the six-month period, with operating expenses as a percentage of revenues improving 78 basis points to 2.07% (Q2) and 59 basis points to 2.18% (six months).
- Net income and EPS surge: Net income attributable to McKesson Corporation jumped 361% to $1.1B in Q2 (vs. $241M), driving diluted EPS of $8.92 vs. $1.87 — a 377% increase — aided by a reported income tax rate that fell to 16.6% from 46.3% in the prior-year quarter; for the six-month period, diluted EPS rose 71% to $15.16 on a 4% reduction in weighted-average diluted shares outstanding to 124.9 million.
in millions
| Line item | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| Revenues | 103,150 | 93,651 | +10.1% |
| Gross profit | 3,542 | 3,248 | +9.1% |
| Other income, net | 62 | 34 | +82.4% |
| Interest expense | (74) | (78) | -5.1% |
| Income before income taxes | 1,395 | 534 | +161.2% |
| Income tax expense | (232) | (247) | -6.1% |
| Net income | 1,163 | 287 | +305.2% |
| Net income attributable to noncontrolling interests | (53) | (46) | +15.2% |
| Net income attributable to McKesson Corporation | 1,110 | 241 | +360.6% |
Revenues
- Revenue drivers: Revenues increased for both the three and six months ended September 30, 2025 compared to the same prior year periods, primarily due to market growth in the North American Pharmaceutical segment, including higher volumes largely from retail national account customers; market growth reflects growing drug utilization and newly launched products, partially offset by branded to generic drug conversion.
- Oncology & Multispecialty contribution: Revenue for both periods was also favorably impacted by growth in the Oncology & Multispecialty segment, primarily due to higher specialty pharmaceutical sales.
Gross Profit
- Gross profit drivers: Gross profit increased for both the three and six months ended September 30, 2025 compared to the same prior year periods, primarily due to growth in the Oncology & Multispecialty segment (driven by addition of providers in practice management and growth of specialty pharmaceuticals) and the Prescription Technology Solutions segment (driven by higher volumes).
- Antitrust settlement gains: Gains related to share of antitrust legal settlements recognized within "Cost of sales" in the North American Pharmaceutical segment were immaterial and $63M for the three months ended September 30, 2025 and 2024, respectively, and $8M and $153M for the six months ended September 30, 2025 and 2024, respectively.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- Restructuring charges in gross profit: Gross profit for the three and six months ended September 30, 2024 was impacted by restructuring charges of $63M related to a broad set of initiatives to drive operational efficiencies and increase cost optimization efforts, recorded as impairment of inventories within "Cost of sales" in the Condensed Consolidated Statements of Operations, entirely within the North American Pharmaceutical segment.
Total Operating Expenses
- SDG&A composition: Consists of personnel costs, transportation costs, depreciation and amortization, lease costs, professional fee expenses, administrative expenses, provision for bad debts and related recoveries, remeasurement charges to fair value less costs to sell, and other general charges.
- Canadian retail disposal group impact: SDG&A for the three and six months ended September 30, 2024 includes charges of $643M to remeasure the sale of the Rexall and Well.ca businesses in Canada to fair value less costs to sell (including a $15M loss related to accumulated other comprehensive loss balances), with $593M in the North American Pharmaceutical segment and $50M in Corporate expenses, net; SDG&A for the three and six months ended September 30, 2025 was impacted by lower operating expenses from the completed divestiture of this disposal group in fiscal 2025.
- Rite Aid provision: SDG&A for the six months ended September 30, 2025 includes a provision for bad debts of $189M, while the three and six months ended September 30, 2024 included a credit of $203M related to the bankruptcy of Rite Aid.
- Claims and restructuring: Claims and litigation charges, net were ($2M) for both the three and six months ended September 30, 2025, versus ($4M) and $108M in the prior-year periods; restructuring, impairment, and related charges, net were $63M and $110M for the three and six months ended September 30, 2025, down 63% and 39% versus prior-year periods.
in millions
| Line item | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| Selling, distribution, general, and administrative expenses | 2,074 | 2,503 | -17.1% |
| Claims and litigation charges, net | (2) | (4) | -50.0% |
| Restructuring, impairment, and related charges, net | 63 | 171 | -63.2% |
| Percent of revenues (%) | 2.07 | 2.85 | -27.4% |
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- SDG&A: Higher operating expenses for the six months ended September 30, 2025 driven by acquisitions completed during the first half of fiscal 2026.
- Claims and litigation charges: Net charge of $108M for the six months ended September 30, 2024 related to estimated liability for opioid-related claims.
- Restructuring, impairment, and related charges, net: $63M and $171M for the three months ended September 30, 2025 and 2024, respectively, and $110M and $181M for the six months ended September 30, 2025 and 2024, respectively.
Goodwill Impairment
- Annual testing: Goodwill impairment testing performed in fiscal 2026 and fiscal 2025 did not indicate any impairment, and no goodwill impairment charges were recorded during the three and six months ended September 30, 2025 and 2024.
- Risk factors: Management notes that government actions, increased regulatory uncertainty, and material changes in key market assumptions limit the ability to estimate projected cash flows, which could adversely affect the fair value of various reporting units in future periods.
Restructuring Initiatives
- Charges recorded: Restructuring, impairment, and related charges totaled $63M and $171M for the three months ended September 30, 2025 and 2024, respectively, and $110M and $181M for the six months ended September 30, 2025 and 2024, respectively, included in "Restructuring, impairment, and related charges, net" in the Condensed Consolidated Statements of Operations.
- Initiative scope and cost estimate: Enterprise-wide initiatives approved in the second quarter of fiscal 2025 to modernize and accelerate the technology service operating model — targeting business continuity, compliance, and operating efficiency — cover Corporate, Medical-Surgical Solutions, and North American Pharmaceutical segments, with anticipated total charges of $650M to $700M consisting primarily of employee severance and other employee-related costs as well as facility, exit, and other related costs, including long-lived asset impairments; programs are anticipated to be substantially complete in fiscal 2028.
- Charges attributable to these initiatives: $52M and $90M for the three and six months ended September 30, 2025, respectively, and $227M for the three and six months ended September 30, 2024, primarily comprising severance and other employee-related costs, facility exit and other related costs, long-lived asset impairments, and a $63M inventory impairment recorded within "Cost of sales."
Other Income, Net
- Drivers (three and six months): Other income, net for both the three and six months ended September 30, 2025 was favorably impacted by net gains from certain investments in equity securities and interest income.
- Prior year comparison (six months): The six-month comparison was further affected by a prior year net gain of $95M related to investments in equity securities of certain U.S. growth stage companies in the healthcare industry, partially offset by a prior year loss of $43M related to one of the company's equity method investments.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Interest Expense
- Interest expense drivers: Interest expense decreased for the three and six months ended September 30, 2025 compared to the same prior year periods, primarily due to changes in the derivative portfolio in fiscal 2026 and increased capitalized interest from higher capital spending, partially offset by interest from increased average balances of the Company's loan portfolio in fiscal 2026.
- Future variability: Interest expense may fluctuate based on timing, amounts, and interest rates of term debt repaid and new term debt issued, as well as amounts incurred associated with financing fees.
Income Tax Expense
- Quarterly income tax expense: Income tax expense was $232M for the three months ended September 30, 2025, down from $247M in the comparable prior-year quarter, while the reported effective tax rate fell sharply to 16.6% from 46.3%.
- Year-to-date income tax expense: For the six months ended September 30, 2025, income tax expense was $452M versus $371M in the prior-year period, with the effective tax rate declining to 18.5% from 22.9%.
- Rate drivers: Fluctuations in the reported income tax rates are primarily attributed to changes in the business mix of earnings among various taxing jurisdictions and discrete tax items recognized in the quarters.
- OBBBA legislation: The One Big Beautiful Bill Act, enacted July 4, 2025, introduced modifications to various U.S. federal tax provisions; management concluded its provisions are not expected to have a material impact on consolidated financial position, results of operations, or cash flows.
Net Income Attributable to Noncontrolling Interests
- Entities driving NCI: Net income attributable to noncontrolling interests for the three and six months ended September 30, 2025 and 2024 primarily represents proportionate results of third-party equity interests in ClarusONE Sourcing Services LLP, Vantage Oncology Holdings, LLC, and SCRI Oncology, LLC.
- Redeemable NCI recognized: During the six months ended September 30, 2025, redeemable noncontrolling interests of $700M and $25M were initially recognized related to acquisitions of Core Ventures and PRISM Vision, respectively; these are presented outside of stockholders' deficit in the Condensed Consolidated Balance Sheet.
- Redemption value adjustments: Following the quarterly valuation process, adjustments to the redemption value of redeemable noncontrolling interests were recorded: $45M for Core Ventures and $2M for PRISM Vision.
Net Income Attributable to McKesson Corporation
- Net income: Net income attributable to McKesson Corporation was $1.1B and $241M for the three months ended September 30, 2025 and 2024, respectively, and $1.9B and $1.2B for the six months ended September 30, 2025 and 2024, respectively.
- Diluted EPS: Diluted earnings per common share attributable to McKesson Corporation was $8.92 and $1.87 for the three months ended September 30, 2025 and 2024, respectively, and $15.16 and $8.89 for the six months ended September 30, 2025 and 2024, respectively, with the diluted EPS figures reflecting the cumulative effects of share repurchases during each period.
Weighted-Average Diluted Common Shares Outstanding
- Weighted-average diluted shares: 124.4 million and 129.3 million for the three months ended September 30, 2025 and 2024, respectively; 124.9 million and 130.0 million for the six months ended September 30, 2025 and 2024, respectively.
- Driver of decline: The decrease in weighted-average diluted shares outstanding for both the three and six months ended September 30, 2025 versus the prior year periods was primarily due to the cumulative effect of share repurchases.
in millions
| Line item | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| Weighted-average diluted common shares outstanding | 124 | 129 | -3.8% |
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Overview of Segment Results:
Segment Revenues:
in millions
Three Months Ended September 30, 2025
North American Pharmaceutical84%+8.1%
Oncology & Multispecialty12%+31.5%
Prescription Technology Solutions1%+8.8%
Medical-Surgical Solutions3%+0.0%
Other0%+14.0%
Three Months Ended September 30, 2024
North American Pharmaceutical85%
Oncology & Multispecialty10%
Prescription Technology Solutions1%
Medical-Surgical Solutions3%
Other0%
| Segment | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | $86,481 | $80,018 | +8.1% |
| Oncology & Multispecialty | $12,044 | $9,157 | +31.5% |
| Prescription Technology Solutions | $1,376 | $1,265 | +8.8% |
| Medical-Surgical Solutions | $2,947 | $2,946 | +0.0% |
| Other | $302 | $265 | +14.0% |
| Total | $103,150 | $93,651 | +10.1% |
North American Pharmaceutical
Three Months Ended September 30, 2025 vs. 2024
- North American Pharmaceutical revenue: Revenues for the three months ended September 30, 2025 increased $6.5B or 8% compared to the same prior year period, driven by higher volumes from retail national account customers, partially offset by branded to generic drug conversions; sales to U.S. pharmacies and healthcare providers specifically increased $6.4B.
Six Months Ended September 30, 2025 vs. 2024
- North American Pharmaceutical revenue: Revenues for the six months ended September 30, 2025 increased $22.8B or 16% compared to the same prior year period, driven by higher volumes from retail national account customers, partially offset by branded to generic drug conversions.
Oncology & Multispecialty
Three Months Ended September 30, 2025 vs. 2024
- Oncology & Multispecialty revenue: Revenues for the three months ended September 30, 2025 increased $2.9B or 32% compared to the same prior year period, primarily driven by growth in provider solutions due to the addition of providers within practice management and higher specialty pharmaceutical sales.
Six Months Ended September 30, 2025 vs. 2024
- Oncology & Multispecialty revenue: Revenues for the six months ended September 30, 2025 increased $4.8B or 27% compared to the same prior year period, primarily driven by growth in provider solutions due to the addition of providers within practice management and higher specialty pharmaceutical sales.
Prescription Technology Solutions
Three Months Ended September 30, 2025 vs. 2024
- RxTS revenue: RxTS revenues for the three months ended September 30, 2025 increased $111M or 9% compared to the same prior year period, driven by increased volumes from third-party logistics and higher technology services revenues.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Six Months Ended September 30, 2025 vs. 2024
- RxTS revenue: Revenues for the six months ended September 30, 2025 increased $304M or 12% compared to the same prior year period, driven by increased volumes from third-party logistics and higher technology services revenues.
Medical-Surgical Solutions
Three Months Ended September 30, 2025 vs. 2024
- Medical-Surgical Solutions revenue: Revenue increased $1M for the three months ended September 30, 2025 compared to the same prior year period, as ambulatory care customer sales grew $7M (driven by underlying business growth) and other sales rose $6M, partially offset by a $12M decline in extended care customer sales.
Six Months Ended September 30, 2025 vs. 2024
- Medical-Surgical Solutions revenue: Increased $70M or 1% for the six months ended September 30, 2025 compared to the same prior year period, with ambulatory care customer sales up $66M driven by underlying business growth and other sales up $18M, partially offset by a $14M decline in extended care customer sales.
Other Segment Expense, Segment Operating Profit and Corporate Expenses, Net:
- Segment operating profit surge: Total segment operating profit (subtotal) grew 96% to $1.7B in Q2 FY2026 vs. $856M in Q2 FY2025, and 40% to $3B for the six months ended September 30, 2025 vs. $2.1B in the prior-year period, driven by broad-based margin expansion across all segments.
- North American Pharmaceutical: Segment operating profit nearly tripled, up 146% to $852M (Q2) and up 38% to $1.4B (six months), with margin expanding 56 bp to 0.99% (Q2) and 13 bp to 0.85% (six months); other segment expense grew 7% to $85.6B (Q2) and 15% to $167.8B (six months).
- Medical-Surgical Solutions and Oncology: Medical-Surgical Solutions operating profit rose 142% to $220M (Q2) with margin expanding 438 bp to 7.47%; Oncology & Multispecialty operating profit rose 66% to $332M (Q2) with margin expanding 58 bp to 2.76%.
- Corporate expenses and income before taxes: Corporate expenses, net were ($207M in Q2 FY2026 vs. ($244M in Q2 FY2025 (a 15% improvement); interest expense declined 5% to ($74M (Q2) and 20% to ($123M (six months), resulting in income before income taxes of $1.4B (Q2, +161%) and $2.4B (six months, +51%).
Other segment expense, net
in millions
| Line item | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | 85,629 | 79,671 | +7.5% |
| Oncology & Multispecialty | 11,712 | 8,957 | +30.8% |
| Prescription Technology Solutions | 1,132 | 1,060 | +6.8% |
| Medical-Surgical Solutions | 2,727 | 2,855 | -4.5% |
| Other | 274 | 252 | +8.7% |
Segment operating profit
in millions
| Line item | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | 852 | 347 | +145.5% |
| Oncology & Multispecialty | 332 | 200 | +66.0% |
| Prescription Technology Solutions | 244 | 205 | +19.0% |
| Medical-Surgical Solutions | 220 | 91 | +141.8% |
| Other | 28 | 13 | +115.4% |
| Corporate expenses, net | (207) | (244) | -15.2% |
| Interest expense | (74) | (78) | -5.1% |
| Income before income taxes | 1,395 | 534 | +161.2% |
Segment operating profit margin
in %
| Line item | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | 0.99 | 0.43 | +130.2% |
| Oncology & Multispecialty | 2.76 | 2.18 | +26.6% |
| Prescription Technology Solutions | 17.73 | 16.21 | +9.4% |
| Medical-Surgical Solutions | 7.47 | 3.09 | +141.7% |
| Other | 9.27 | 4.91 | +88.8% |
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- North American Pharmaceutical segment charges: Other segment expense, net includes a provision for bad debts of $189M for the six months ended September 30, 2025 (vs. a credit of $203M for both the three and six months ended September 30, 2024) related to the Rite Aid bankruptcy; antitrust legal settlement cash receipts were immaterial and $63M for the three months ended September 30, 2025 and 2024, respectively, and $8M and $153M for the six months ended September 30, 2025 and 2024, respectively; the prior-year period also included a $593M fair-value remeasurement charge on the Canadian retail disposal group, restructuring charges of $63M (three months) and $65M (six months) ended September 30, 2024, and a $57M opioid liability charge for the six months ended September 30, 2024.
- Oncology & Multispecialty segment: Other segment expense, net includes a net gain of $51M for both the three and six months ended September 30, 2025 related to the sale of an investment and market decisions, compared to a loss of $43M for the six months ended September 30, 2024 related to one of the Company's equity method investments.
- Medical-Surgical Solutions segment: Other segment expense, net for the three and six months ended September 30, 2024 includes restructuring charges of $144M related to operational efficiency and cost optimization initiatives.
- Corporate expenses, net: Includes restructuring charges of $38M and $23M for the three months ended September 30, 2025 and 2024, respectively, and $67M and $24M for the six months ended September 30, 2025 and 2024, respectively; the prior-year six-month period also included a $50M charge for accumulated other comprehensive loss components from the Canadian retail disposal group (three and six months ended September 30, 2024), a net gain of $95M on equity securities investments, and a net charge of $51M for opioid-related claims.
North American Pharmaceutical
Three Months Ended September 30, 2025 vs. 2024
- Operating profit drivers: Operating profit for this segment increased for the three months ended September 30, 2025 compared to the same prior year period largely due to prior year remeasurement charges related to the Canadian retail disposal group held for sale and higher pharmaceutical distribution volumes across the segment, partially offset by a prior year credit of $203M related to the bankruptcy of Rite Aid and a decrease from net cash proceeds received representing the company's share of antitrust legal settlements.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Six Months Ended September 30, 2025 vs. 2024
- Operating profit drivers: Operating profit for the segment increased for the six months ended September 30, 2025 vs. the prior year period, driven by prior year remeasurement charges related to the Canadian retail disposal group held for sale, higher pharmaceutical distribution volumes across the segment, and a prior year charge of $57M related to estimated liability for opioid-related claims.
- Rite Aid headwind: A prior year credit of $203M and a current year provision for bad debts of $189M related to the bankruptcy of Rite Aid partially offset the increases, along with a decrease from net cash proceeds representing the company's share of antitrust legal settlements and an increase in operating expenses to support higher volumes.
Oncology & Multispecialty
Three Months Ended September 30, 2025 vs. 2024
- Operating profit drivers: Operating profit for this segment increased for the three months ended September 30, 2025 compared to the same prior year period primarily due to growth in specialty pharmaceuticals and a net gain of $51M related to the sale of an investment and market decisions, partially offset by an increase in operating expenses to support higher volumes.
Six Months Ended September 30, 2025 vs. 2024
- Segment operating profit drivers: Operating profit increased for the six months ended September 30, 2025 vs. the prior year period, primarily driven by growth in specialty pharmaceuticals, a net gain of $51M related to the sale of an investment and market decisions, and a prior year loss of $43M related to one of the company's equity method investments, partially offset by an increase in operating expenses to support higher volumes.
Prescription Technology Solutions
Three Months Ended September 30, 2025 vs. 2024
Segment operating profit: Operating profit for this segment increased for the three months ended September 30, 2025 compared to the same prior year period, driven by increased volumes primarily from growth in technology services.
Six Months Ended September 30, 2025 vs. 2024
Operating profit: Segment operating profit increased for the six months ended September 30, 2025 compared to the same prior year period, driven by increased volumes primarily from growth in technology services.
Medical-Surgical Solutions
Three Months Ended September 30, 2025 vs. 2024
- Operating profit driver: Segment operating profit increased for the three months ended September 30, 2025 vs. the same prior year period, primarily due to lower expenses resulting from business rationalization initiatives, partially offset by a decline in the contribution from the ambulatory care and extended care businesses.
Six Months Ended September 30, 2025 vs. 2024
- Operating profit drivers: Segment operating profit increased for the six months ended September 30, 2025 vs. the same prior year period, primarily due to lower expenses from business rationalization initiatives, partially offset by a decline in the contribution from the ambulatory care and extended care businesses.
Corporate Expenses, Net
Three Months Ended September 30, 2025 vs. 2024
- Corporate expenses, net: Decreased for the three months ended September 30, 2025 compared to the same prior year period, primarily due to prior year remeasurement charges related to the Canadian retail disposal group held for sale, a favorable impact to equity investments and interest income, partially offset by higher restructuring charges compared to prior year.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Six Months Ended September 30, 2025
- Corporate expenses, net: Increased for the six months ended September 30, 2025 compared to the same prior year period, primarily due to prior year gains related to investments in equity securities of certain U.S. growth stage companies in the healthcare industry, higher restructuring charges compared to prior year, partially offset by lower litigation charges in the current year and prior year remeasurement charges related to the Canadian retail disposal group held for sale.
New Accounting Pronouncements
Boilerplate only. Nothing of substance to surface.
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
- Liquidity adequacy: Management expects available cash from operations and the short-term investment portfolio, combined with credit facilities, the commercial paper program, and other borrowings, to be sufficient to fund short-term and long-term capital expenditures, working capital, and other cash requirements.
- Credit facilities: Liquidity sources include a $4B revolving credit facility and a $1B 364-day credit facility; as of September 30, 2025, the company was in compliance with all debt covenants and believes it has the ability to continue to meet those covenants.
- Net cash movement: Net cash, cash equivalents, and restricted cash decreased by $1.8B in the six months ended September 30, 2025, versus a decrease of $2.1B in the comparable prior-year period, a $227M improvement.
in millions
| Line item | Six Months Ended September 30, 2025 | Six Months Ended September 30, 2024 | YoY |
|---|---|---|---|
| Operating activities | 1,502 | 720 | +108.6% |
| Investing activities | (3,588) | (373) | +861.9% |
| Financing activities | 215 | (2,408) | -108.9% |
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 24 | 1 | +2300.0% |
| Change in cash, cash equivalents, and restricted cash classified as Assets held for sale | 0 | (14) | -100.0% |
| Net change in cash, cash equivalents, and restricted cash | (1,847) | (2,074) | -10.9% |
Operating Activities
- Operating cash flow: Operating activities provided cash of $1.5B during the six months ended September 30, 2025, compared to $720M in the same prior year period, an increase of $782M year-over-year.
- Net income and non-cash items: Net income increased by $747M, partially offset by lower net non-cash items of $450M compared to the same prior year period.
- Working capital drivers: Accounts receivable contributed a $1.2B increase in net cash due to favorable timing of collections, while accounts payable decreased cash by $1.1B as a result of customary vendor payment scheduling; lower inventory requirements added $111M and lower contract liability payments contributed additional cash from other assets and liabilities.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Investing Activities
- Cash used in investing: Investing activities used $3.6B and $373M during the six months ended September 30, 2025 and 2024, respectively, with the increase driven primarily by acquisition spending in the current period.
- Acquisitions: The six months ended September 30, 2025 included $3.4B of net cash payments for acquisitions, comprising $2.5B for Core Ventures and $871M for PRISM Vision.
- Capital expenditures: Capital expenditures for property, plant, and equipment and capitalized software were $385M in both the six months ended September 30, 2025 and September 30, 2024.
- Asset sale proceeds: Investing activities for the six months ended September 30, 2025 included $133M of proceeds from the sale of businesses and investments; the six months ended September 30, 2024 included $92M of proceeds from the sale of equity securities.
Financing Activities
- Net financing cash flows: Financing activities provided cash of $215M for the six months ended September 30, 2025, compared to using cash of $2.4B for the six months ended September 30, 2024.
- Share repurchases and dividends: Cash paid for share repurchases was $1.4B (six months ended September 30, 2025) vs. $2B (prior-year period); cash paid for dividends was $179M vs. $162M, respectively.
- Commercial paper: Cash receipts and payments related to short-term borrowings of commercial paper were $6.9B each for the six months ended September 30, 2024, compared to $2.3B each for the six months ended September 30, 2025.
- Public debt offerings: On May 30, 2025, the company completed a public debt offering of 4.65% Notes due May 30, 2030 ($650M principal), 4.95% Notes due May 30, 2032 ($650M principal), and 5.25% Notes due May 30, 2035 ($700M principal), for total net proceeds of $2B used to fund the purchase of the interest in Core Ventures; on September 10, 2024, the company issued 4.25% Notes due September 15, 2029 ($500M principal, ~$496M net proceeds) and used those proceeds plus cash on hand to redeem $500M of 5.25% Notes due February 15, 2026 at 100% of principal plus accrued interest.
Share Repurchase Plans
- Board authorization: The Board has authorized repurchases of common stock via open market transactions, privately negotiated transactions, accelerated share repurchase programs, or combinations thereof, including Rule 10b5-1(c) pre-arranged trading plans; timing and volume depend on stock price, corporate and regulatory requirements, tax implications, debt restrictions, other capital uses, and market conditions.
- Excise taxes — quarterly: Excise taxes of $8M and $15M were accrued for shares repurchased during the three months ended September 30, 2025 and 2024, respectively.
- Excise taxes — year-to-date and balance: Excise taxes of $10M and $16M were accrued for shares repurchased during the six months ended September 30, 2025 and 2024, respectively; on July 30, 2025, a payment of $26M was made for fiscal 2025 excise taxes previously accrued, leaving $10M accrued as of September 30, 2025 versus $26M as of March 31, 2025, recorded within "Other accrued liabilities" on the Condensed Consolidated Balance Sheets.
FINANCIAL REVIEW (CONTINUED)
Number of
Shares
- Repurchase program balance: Remaining authorization was $7.5B at March 31, 2025, declining to $6.1B at September 30, 2025 after $1.4B of open-market repurchases in the six months ended September 30, 2025.
- Q1 activity: 0.8 million shares repurchased in Q1 at an average price of $709.84 per share, reducing authorization by $590M.
- Q2 activity: 1.2 million shares repurchased in Q2 at an average price of $693.25 per share, reducing authorization by $809M.
- Excise taxes: The average price paid per share includes $10M of excise taxes for the six months ended September 30, 2025; the table excludes equity awards surrendered to satisfy tax withholding obligations or forfeitures of equity awards.
in millions
| Line item | Q1 | Q2 | YoY |
|---|---|---|---|
| Shares repurchased - Open market (millions of shares) | 0.80 | 1.20 | -33.3% |
| Average Price Paid Per Share ($) | 710 | 693 | +2.4% |
| Reduction in authorization | 590 | 809 | -27.1% |
Number of
Shares
- Q1 repurchases: 1.0 million shares repurchased on the open market at an average price of $548.20 per share, reducing the program balance by $527M.
- Q2 repurchases: 2.9 million shares repurchased on the open market at an average price of $533.46 per share, reducing the program balance by $1.5B; $22M of this was accrued within "Other accrued liabilities" as of September 30, 2024 for repurchases executed in late September 2024 and settled in early October 2024.
- Board authorization: A new $4B authorization was approved in July 2024, bringing the approximate dollar value of shares that may yet be purchased to $8.6B as of September 30, 2024, up from $6.6B at March 31, 2024.
- Excise taxes & exclusions: The average price paid per share includes $16M of excise taxes for the six months ended September 30, 2024; the table excludes equity awards surrendered to satisfy tax withholding obligations and forfeitures of equity awards.
in millions
| Line item | Q1 (Open market) | Q2 (Open market) | YoY |
|---|---|---|---|
| Shares repurchased (millions) | 1 | 2.90 | -65.5% |
| Average price paid per share ($) | 548 | 533 | +2.8% |
| Dollar value of shares purchased | 527 | 1,528 | -65.5% |
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Selected Measures of Liquidity and Capital Resources
- Cash and liquidity: Cash, cash equivalents, and restricted cash was $4.1B as of September 30, 2025, down from $6B as of March 31, 2025; approximately $1.6B of the September 30, 2025 balance was held by subsidiaries outside the U.S. (versus approximately $2.9B as of March 31, 2025), primarily intended for foreign operations for an indefinite period.
- Working capital: Working capital was ($8.1B as of September 30, 2025, deteriorating from ($6.2B as of March 31, 2025, driven primarily by an increase in drafts and accounts payable from increased purchasing, a decrease in cash and cash equivalents, an increase in current portion of long-term debt, and an increase in other accrued liabilities, partially offset by increases in inventories, net, and receivables, net.
- Debt to capital ratio: The ratio decreased to 112.0% as of September 30, 2025 from 125.3% as of March 31, 2025, reflecting net income attributable to McKesson for fiscal 2026 and issuance of new long-term debt, partially offset by share repurchases and dividend payments; the ratio is computed as total debt divided by the sum of total debt and McKesson stockholders' deficit (excluding noncontrolling interests and accumulated other comprehensive loss).
- Dividend: On July 29, 2025, the quarterly dividend was raised from $0.71 to $0.82 per share of common stock; the Board retains discretion over future dividend payments and amounts.
in millions
| Line item | September 30, 2025 | March 31, 2025 | YoY |
|---|---|---|---|
| Cash, cash equivalents, and restricted cash | 4,109 | 5,956 | -31.0% |
| Working capital | (8,144) | (6,206) | +31.2% |
| Debt to capital ratio (%) | 112 | 125 | -10.6% |
Redeemable Noncontrolling Interests
- New acquisitions: During the six months ended September 30, 2025, redeemable noncontrolling interests of $25M and $700M were initially recognized related to the acquisitions of 80% of PRISM Vision and 70% of Core Ventures, respectively.
- Measurement basis: The balance of redeemable noncontrolling interests is reported at the greater of its carrying value or its maximum redemption value at each reporting date; the 30% minority interest retained by FCS is classified as redeemable noncontrolling interest with a put option exercisable every five years, subject to a floor of 75% of initial fair value.
- Redemption value adjustments: As a result of the quarterly valuation process, redemption value adjustments of $2M for PRISM Vision and $45M for Core Ventures were recorded.
McKESSON CORPORATION
FINANCIAL REVIEW (CONCLUDED)
(UNAUDITED)
Boilerplate only. Nothing of substance to surface.
Capital Resources
- Funding sources: Working capital is funded primarily with cash and cash equivalents, proceeds from short-term commercial paper issuances, and longer-term credit agreements and debt offerings.
- Debt maturities and litigation obligations: Funds for future debt maturities and other cash requirements — including any future payments related to a total estimated litigation liability of $5.7B as of September 30, 2025 payable under various settlement agreements for opioid-related claims — are expected to be met by existing cash balances, cash flow from operations, existing credit sources, and future borrowings.
- Market access: Long-term debt markets and commercial paper markets, described as the primary sources of capital after cash flow from operations, are characterized as open and accessible.
- Liquidity adequacy: Management believes future operating cash flow, financial assets, and access to capital and credit markets, including credit facilities, provide the ability to meet financing needs for the foreseeable future, though no assurance is given that capital market volatility or disruption will not impair liquidity or increase borrowing costs.
CAUTIONARY NOTICE ABOUT FORWARD-LOOKING STATEMENTS
Boilerplate only. Nothing of substance to surface.
AVAILABLE INFORMATION
Boilerplate only. Nothing of substance to surface.
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