MCK 10-Q: Smart Summary
§ Financial statements
Consolidated Statements of Operations
| Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| Revenues | $ | 106,158 | $ | 95,294 | $ | 307,135 | $ | 268,228 | |||||||||||||||||||||
| Cost of sales | (102,473) | (92,010) | (296,629) | (258,544) | |||||||||||||||||||||||||
| Gross profit | 3,685 | 3,284 | 10,506 | 9,684 | |||||||||||||||||||||||||
| Selling, distribution, general, and administrative expenses | (2,030) | (2,028) | (6,300) | (6,532) | |||||||||||||||||||||||||
| Claims and litigation charges, net | — | — | 2 | (108) | |||||||||||||||||||||||||
| Restructuring, impairment, and related charges, net | (36) | (32) | (146) | (213) | |||||||||||||||||||||||||
| Total operating expenses | (2,066) | (2,060) | (6,444) | (6,853) | |||||||||||||||||||||||||
| Operating income | 1,619 | 1,224 | 4,062 | 2,831 | |||||||||||||||||||||||||
| Other income, net | 74 | 69 | 200 | 233 | |||||||||||||||||||||||||
| Interest expense | (63) | (67) | (186) | (220) | |||||||||||||||||||||||||
| Income before income taxes | 1,630 | 1,226 | 4,076 | 2,844 | |||||||||||||||||||||||||
| Income tax expense | (380) | (298) | (832) | (669) | |||||||||||||||||||||||||
| Net income | 1,250 | 928 | 3,244 | 2,175 | |||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (64) | (49) | (164) | (140) | |||||||||||||||||||||||||
| Net income attributable to McKesson Corporation | $ | 1,186 | $ | 879 | $ | 3,080 | $ | 2,035 | |||||||||||||||||||||
| Earnings per common share attributable to McKesson Corporation | |||||||||||||||||||||||||||||
| Diluted | $ | 9.59 | $ | 6.95 | $ | 24.73 | $ | 15.80 | |||||||||||||||||||||
| Basic | $ | 9.63 | $ | 6.98 | $ | 24.83 | $ | 15.88 | |||||||||||||||||||||
| Weighted-average common shares outstanding | |||||||||||||||||||||||||||||
| Diluted | 123.7 | 126.6 | 124.5 | 128.8 | |||||||||||||||||||||||||
| Basic | 123.2 | 126.0 | 124.0 | 128.2 | |||||||||||||||||||||||||
Consolidated Balance Sheets
| December 31, 2025 | March 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 2,959 | $ | 5,691 | |||||||
| Receivables, net | 28,213 | 25,643 | |||||||||
| Inventories, net | 27,067 | 23,001 | |||||||||
| Prepaid expenses and other | 1,458 | 1,063 | |||||||||
| Total current assets | 59,697 | 55,398 | |||||||||
| Property, plant, and equipment, net | 2,634 | 2,502 | |||||||||
| Operating lease right-of-use assets | 2,056 | 1,782 | |||||||||
| Goodwill | 11,324 | 10,022 | |||||||||
| Intangible assets, net | 4,179 | 1,464 | |||||||||
| Other non-current assets | 4,300 | 3,972 | |||||||||
| Total assets | $ | 84,190 | $ | 75,140 | |||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND DEFICIT | |||||||||||
| Current liabilities | |||||||||||
| Drafts and accounts payable | $ | 60,683 | $ | 55,330 | |||||||
| Current portion of long-term debt | 1,132 | 1,191 | |||||||||
| Current portion of operating lease liabilities | 286 | 258 | |||||||||
| Other accrued liabilities | 6,030 | 4,825 | |||||||||
| Total current liabilities | 68,131 | 61,604 | |||||||||
| Long-term debt | 5,425 | 4,463 | |||||||||
| Long-term deferred tax liabilities | 1,108 | 1,029 | |||||||||
| Long-term operating lease liabilities | 1,781 | 1,478 | |||||||||
| Long-term litigation liabilities | 5,103 | 5,601 | |||||||||
| Other non-current liabilities | 2,741 | 2,659 | |||||||||
| Redeemable noncontrolling interests | 802 | — | |||||||||
| 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 December 31, 2025 and March 31, 2025, respectively | 3 | 3 | |||||||||
| Additional paid-in capital | 8,546 | 8,373 | |||||||||
| Retained earnings | 20,710 | 17,921 | |||||||||
| Accumulated other comprehensive loss | (903) | (932) | |||||||||
Treasury shares, at cost, 157 and 154 shares at December 31, 2025 and March 31, 2025, respectively | (29,654) | (27,439) | |||||||||
| Total McKesson Corporation stockholders’ deficit | (1,298) | (2,074) | |||||||||
| Noncontrolling interests | 397 | 380 | |||||||||
| Total deficit | (901) | (1,694) | |||||||||
Total liabilities, redeemable noncontrolling interests, and deficit | $ | 84,190 | $ | 75,140 | |||||||
Consolidated Statements of Cash Flows
| Nine Months Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 3,244 | $ | 2,175 | |||||||
| Adjustments to reconcile to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation | 189 | 182 | |||||||||
| Amortization | 344 | 303 | |||||||||
| Asset impairment charges | 10 | 83 | |||||||||
| Deferred taxes | 8 | 150 | |||||||||
| Charges (credits) associated with last-in, first-out inventory method | (28) | 85 | |||||||||
| Non-cash operating lease expense | 184 | 179 | |||||||||
| Loss (gain) from sales of businesses and investments | (85) | 571 | |||||||||
| Provision for bad debts | 81 | (144) | |||||||||
| Other non-cash items | 209 | 211 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Receivables | (2,130) | (4,064) | |||||||||
| Inventories | (4,098) | (3,134) | |||||||||
| Drafts and accounts payable | 4,891 | 2,677 | |||||||||
| Operating lease liabilities | (202) | (305) | |||||||||
| Taxes | 184 | (288) | |||||||||
| Litigation liabilities | (669) | (386) | |||||||||
| Other | 602 | 42 | |||||||||
| Net cash provided by (used in) operating activities | 2,734 | (1,663) | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Payments for property, plant, and equipment | (325) | (368) | |||||||||
| Capitalized software expenditures | (235) | (213) | |||||||||
| Acquisitions, net of cash, cash equivalents, and restricted cash acquired | (3,412) | (3) | |||||||||
| Proceeds from sales of businesses and investments, net | 137 | 83 | |||||||||
| Other | (22) | (8) | |||||||||
| Net cash used in investing activities | (3,857) | (509) | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from short-term borrowings | 2,275 | 11,395 | |||||||||
| Repayments of short-term borrowings | (2,275) | (8,970) | |||||||||
| Proceeds from issuances of long-term debt | 1,990 | 498 | |||||||||
| Repayments of long-term debt | (1,199) | (510) | |||||||||
| Common stock transactions: | |||||||||||
| Issuances | 65 | 73 | |||||||||
| Share repurchases | (2,079) | (2,846) | |||||||||
| Dividends paid | (280) | (254) | |||||||||
| Other | (308) | (496) | |||||||||
| Net cash used in financing activities | (1,811) | (1,110) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 31 | (21) | |||||||||
| Net decrease in cash, cash equivalents, and restricted cash | (2,903) | (3,303) | |||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 5,956 | 4,585 | |||||||||
| Cash, cash equivalents, and restricted cash at end of period | 3,053 | 1,282 | |||||||||
Less: Restricted cash at end of period included in Prepaid expenses and other | (94) | (151) | |||||||||
Cash and cash equivalents at end of period | $ | 2,959 | $ | 1,131 | |||||||
Consolidated Statements of Comprehensive Income
| Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | 1,250 | $ | 928 | $ | 3,244 | $ | 2,175 | |||||||||||||||
| Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
| Foreign currency translation adjustments | 3 | (112) | 19 | (109) | |||||||||||||||||||
| Unrealized gain on cash flow and other hedges | 3 | 11 | 12 | 2 | |||||||||||||||||||
| Changes in retirement-related benefit plans | (1) | 2 | (2) | (1) | |||||||||||||||||||
| Other comprehensive income (loss), net of tax | 5 | (99) | 29 | (108) | |||||||||||||||||||
| Comprehensive income | 1,255 | 829 | 3,273 | 2,067 | |||||||||||||||||||
| Comprehensive income attributable to noncontrolling interests | (64) | (49) | (164) | (140) | |||||||||||||||||||
| Comprehensive income attributable to McKesson Corporation | $ | 1,191 | $ | 780 | $ | 3,109 | $ | 1,927 | |||||||||||||||
Notes to Financials
Note 1: Significant Accounting Policies
Boilerplate only. Nothing of substance to surface.
Note 2: Business Acquisitions and Divestitures
Boilerplate only. Nothing of substance to surface.
Note 3: Restructuring, Impairment, and Related Charges, Net
Boilerplate only. Nothing of substance to surface.
Note 10: Fair Value Measurements
Boilerplate only. Nothing of substance to surface.
Note 13: Segments of Business
- Segment structure change: Commencing in the second quarter of fiscal 2026, the Company implemented a new segment reporting structure resulting in four reportable segments: North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions (RxTS), and Medical-Surgical Solutions. All prior segment information has been recast to reflect this new structure. The Company's Norwegian operations are included in Other; the Norway disposal group was sold on January 30, 2026.
- CODM performance metric: The CODM uses operating profit before interest expense and income taxes to assess performance and allocate resources. Assets by segment are not a measure used to assess performance and are thus not reported.
- Medical-Surgical Solutions separation: On May 8, 2025, the Company announced its intention to separate the Medical-Surgical Solutions segment into an independent company.
- Corporate and reconciling items: Corporate expenses, net (($223M) and ($155M) for the three months ended December 31, 2025 and 2024, respectively) and interest expense are excluded from segment operating profit and reconcile segment subtotals to consolidated income before income taxes. 'Other segment expense, net' includes cost of sales, total operating expenses, and other income, net for each reportable segment.
in millions
| Line item | Three Months Ended December 31, 2025 | Three Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical — Revenues | 88,322 | 81,198 | +8.8% |
| Oncology & Multispecialty — Revenues | 13,010 | 9,493 | +37.0% |
| Prescription Technology Solutions — Revenues | 1,500 | 1,371 | +9.4% |
| Medical-Surgical Solutions — Revenues | 2,991 | 2,949 | +1.4% |
| Other — Revenues | 335 | 283 | +18.4% |
| North American Pharmaceutical — Other segment expense, net | 87,267 | 80,454 | +8.5% |
| Oncology & Multispecialty — Other segment expense, net | 12,706 | 9,291 | +36.8% |
| Prescription Technology Solutions — Other segment expense, net | 1,239 | 1,152 | +7.6% |
| Medical-Surgical Solutions — Other segment expense, net | 2,726 | 2,680 | +1.7% |
| Other — Other segment expense, net | 304 | 269 | +13.0% |
| North American Pharmaceutical — Segment operating profit | 1,055 | 744 | +41.8% |
| Oncology & Multispecialty — Segment operating profit | 304 | 202 | +50.5% |
| Prescription Technology Solutions — Segment operating profit | 261 | 219 | +19.2% |
| Medical-Surgical Solutions — Segment operating profit | 265 | 269 | -1.5% |
| Other — Segment operating profit | 31 | 14 | +121.4% |
| North American Pharmaceutical — Depreciation and amortization | 34 | 33 | +3.0% |
| Oncology & Multispecialty — Depreciation and amortization | 63 | 37 | +70.3% |
| Prescription Technology Solutions — Depreciation and amortization | 21 | 22 | -4.5% |
| Medical-Surgical Solutions — Depreciation and amortization | 26 | 23 | +13.0% |
| Other — Depreciation and amortization | 0 | 4 | -100.0% |
| Corporate — Depreciation and amortization | 44 | 34 | +29.4% |
| North American Pharmaceutical — Expenditures for long-lived assets | 84 | 62 | +35.5% |
| Oncology & Multispecialty — Expenditures for long-lived assets | 17 | 27 | -37.0% |
| Prescription Technology Solutions — Expenditures for long-lived assets | 1 | 3 | -66.7% |
| Medical-Surgical Solutions — Expenditures for long-lived assets | 24 | 36 | -33.3% |
| Other — Expenditures for long-lived assets | 4 | 3 | +33.3% |
| Corporate — Expenditures for long-lived assets | 45 | 65 | -30.8% |
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 whose teams partner with biopharma companies, care providers, pharmacies, manufacturers, and governments to deliver insights, products, and services aimed at making quality care more accessible and affordable.
- Segment restructuring: A new segment reporting structure was implemented commencing in the second quarter of fiscal 2026, resulting in 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.
- Performance evaluation: Management evaluates operating segment performance on a number of measures including revenues and operating profit before interest expense and income taxes; Corporate consists of income and expenses associated with administrative functions and projects, as well as the results of certain investments.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- Segment structure: McKesson operates 4 reportable segments — North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions, and Medical-Surgical Solutions — following a reorganization that split the former U.S. Pharmaceutical and former International reportable segments into the current structure.
- Medical-Surgical separation: On May 8th, 2025, McKesson announced its intention to separate the Medical-Surgical Solutions segment into an independent company.
- Norway divestiture: Norwegian operations (distribution and services to wholesale and retail customers, including owned, partnered, and franchised retail pharmacies) were moved from the former International segment into Other; during the nine months ended December 31, 2025, a definitive agreement was entered to sell the Norway businesses and assets/liabilities were classified as held for sale, with the sale completed on January 30, 2026.
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, a leading provider of general ophthalmology and retina administrative services, for $875M 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 close: 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; FCS physicians retained the remaining 30% interest.
- Segment reporting: As of the acquisition date, Core Ventures is part of the Oncology platform and its 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 (three months ended December 31, 2025): Revenues increased 11%, gross profit increased 12%, total operating expenses were flat, and other income, net increased 7% compared to the prior year; diluted EPS attributable to McKesson Corporation rose to $9.59 from $6.95.
- Revenue and profitability (nine months ended December 31, 2025): Revenues increased 15%, gross profit increased 8%, total operating expenses decreased 6%, and other income, net decreased 14% compared to the prior year; diluted EPS rose to $24.73 from $15.80; the period also included an immaterial net charge of $29M related to the bankruptcy of Rite Aid Corporation.
- Acquisitions: On April 1, 2025, McKesson completed the acquisition of a controlling interest in PRISM Vision for $875M in cash; on June 2, 2025, McKesson completed the acquisition of a controlling interest in Core Ventures for $2.5B in cash.
- Capital structure and shareholder returns: A May 30, 2025 public debt offering of 4.65% Notes due 2030 ($650M), 4.95% Notes due 2032 ($650M), and 5.25% Notes due 2035 ($700M) generated net proceeds of $2B (used alongside cash on hand to fund Core Ventures); the €600 million 1.50% Notes matured November 14, 2025 and the $500M 0.90% Notes matured December 3, 2025, both repaid from cash on hand; during the nine months ended December 31, 2025, McKesson returned $2.4B to shareholders via $2.1B of common stock repurchases and $280M of dividends, with $5.4B of repurchase authorization remaining, and the quarterly dividend was raised to $0.82 from $0.71 per share effective July 29, 2025.
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 11% to $106.2B for the three months ended December 31, 2025, and 15% to $307.1B for the nine months ended December 31, 2025.
- Margin and operating leverage: Gross profit margin was 3.47% for the quarter (up 2 bp year-over-year) but 3.42% for the nine-month period (down 19 bp); total operating expenses as a % of revenues improved 21 bp to 1.95% for the quarter and 45 bp to 2.10% for the nine months.
- Bottom-line performance: Net income attributable to McKesson Corporation rose 35% to $1.2B for the quarter and 51% to $3.1B for the nine months, with diluted EPS up 38% to $9.59 and 57% to $24.73, respectively, aided by a reported income tax rate decline of 100 bp (to 23.3%) for the quarter and 310 bp (to 20.4%) for the nine months.
- Share count: Weighted-average diluted common shares outstanding declined 2% to 123.7 million for the quarter and 3% to 124.5 million for the nine months.
in millions
| Line item | Three Months Ended December 31, 2025 | Three Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| Revenues | 106,158 | 95,294 | +11.4% |
| Gross profit | 3,685 | 3,284 | +12.2% |
| Other income, net | 74 | 69 | +7.2% |
| Interest expense | (63) | (67) | -6.0% |
| Income before income taxes | 1,630 | 1,226 | +33.0% |
| Income tax expense | (380) | (298) | +27.5% |
| Net income | 1,250 | 928 | +34.7% |
| Net income attributable to noncontrolling interests | (64) | (49) | +30.6% |
| Net income attributable to McKesson Corporation | 1,186 | 879 | +34.9% |
Revenues
- North American Pharmaceutical: Revenues increased for both the three and nine months ended December 31, 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 includes growing drug utilization and newly launched products, partially offset by branded to generic drug conversion.
- Oncology & Multispecialty: Revenues for both the three and nine months ended December 31, 2025 were 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 nine months ended December 31, 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 the company's share of antitrust legal settlements were $15M and $31M for the three months ended December 31, 2025 and 2024, respectively, and $23M and $184M for the nine months ended December 31, 2025 and 2024, respectively; these amounts were recognized within "Cost of sales" in the North American Pharmaceutical segment.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- Restructuring charges in gross profit: Gross profit for the nine months ended December 31, 2024 was impacted by $63M in restructuring charges related to operational efficiency and cost optimization initiatives, recorded as impairment of inventories within "Cost of sales" in the North American Pharmaceutical segment.
- LIFO adjustments: A LIFO credit of $10M and a charge of $89M were recognized during the three months ended December 31, 2025 and 2024, respectively; a credit of $28M and a charge of $85M were recognized during the nine months ended December 31, 2025 and 2024, respectively, primarily due to lower expected brand inflation in the current fiscal year.
- LIFO methodology: The North American Pharmaceutical business uses the LIFO method for the majority of its inventories; quarterly LIFO adjustments are estimates based on expected changes in year-end inventory quantities, product mix, and manufacturer pricing practices, with the actual valuation calculated at fiscal year-end — changes to any of these factors could have a material impact on the annual LIFO adjustment.
Total Operating Expenses
- SDG&A composition: SDG&A 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; legal fees to defend claims are expensed as incurred and included within SDG&A.
- Claims and litigation charges: These charges include adjustments for estimated probable settlements related to controlled substance monitoring and reporting and opioid-related claims, as well as income items or credit adjustments for subsequent changes in estimates; for the nine months ended December 31, 2025, charges were ($2M) versus $108M in the prior year period, a ($110M) swing.
- Total operating expenses trend: For the three months ended December 31, 2025, total operating expenses were approximately flat at $2.1B vs. $2.1B, while as a percentage of revenues they declined 21 basis points to 1.95%; for the nine months ended December 31, 2025, total operating expenses decreased 6% to $6.4B from $6.9B, with the percentage of revenues declining 45 basis points to 2.10%.
- Restructuring charges: Restructuring, impairment, and related charges, net were $36M for the three months ended December 31, 2025 (up 13% from $32M) and $146M for the nine months ended December 31, 2025 (down 31% from $213M).
in millions
| Line item | Three Months Ended December 31, 2025 | Three Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| Selling, distribution, general, and administrative expenses | 2,030 | 2,028 | +0.1% |
| Claims and litigation charges, net | 0 | 0 | — |
| Restructuring, impairment, and related charges, net | 36 | 32 | +12.5% |
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- Rite Aid impact: SDG&A for the nine months ended December 31, 2025 includes an immaterial net charge of $29M, primarily reflecting the provision for bad debts partially offset by the disposition of rebate liabilities and vendor credits related to the Rite Aid bankruptcy.
- Canadian retail disposal group: SDG&A for the nine months ended December 31, 2024 includes charges of $666M to remeasure the Rexall and Well.ca businesses to fair value less costs to sell, including a $48M loss on accumulated other comprehensive loss balances; $604M was recorded within the North American Pharmaceutical segment and $62M within Corporate expenses, net.
- Opioid and litigation charges: Claims and litigation charges, net for the nine months ended December 31, 2024 primarily consisted of a charge of $108M related to estimated liability for opioid-related claims; no comparable charge is noted for the nine months ended December 31, 2025.
- Restructuring charges: Restructuring, impairment, and related charges, net were $36M and $32M for the three months ended December 31, 2025 and 2024, respectively, and $146M and $213M for the nine months ended December 31, 2025 and 2024, respectively.
Goodwill Impairment
- Impairment testing results: Annual 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 nine months ended December 31, 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
- Restructuring charges: Recorded restructuring, impairment, and related charges of $36M for the three months ended December 31, 2025, compared to $32M for the three months ended December 31, 2024, and $146M for the nine months ended December 31, 2025, compared to $213M for the nine months ended December 31, 2024; all charges were included in "Restructuring, impairment, and related charges, net" in the Condensed Consolidated Statements of Operations.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- Initiative scope: In the second quarter of fiscal 2025, the company approved enterprise-wide initiatives to modernize and accelerate its technology service operating model, targeting improved business continuity, compliance, and operating efficiency across Corporate and the Medical-Surgical Solutions and North American Pharmaceutical segments, with programs anticipated to be substantially complete in fiscal 2028.
- Total expected charges: 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.
- Charges recorded: Charges of $26M and $116M were recorded for the three and nine months ended December 31, 2025, respectively; charges of $18M and $245M were recorded for the three and nine months ended December 31, 2024, respectively, with the nine months ended December 31, 2024 figure including $63M of inventory impairments recorded within "Cost of sales."
Other Income, Net
- Drivers (three and nine months): Other income, net for both the three and nine months ended December 31, 2025 benefited from net gains on certain investments in equity securities and favorable interest income relative to the prior year periods.
- Prior year nine-month comparison: The nine-month comparison was also affected by a prior year net gain of $101M from investments in equity securities of certain U.S. growth stage companies in the healthcare industry, partially offset by a prior year loss of $43M on one of the company's equity method investments.
Interest Expense
- Interest expense drivers: Interest expense decreased for the three and nine months ended December 31, 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: Management notes 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: $380M for the three months ended December 31, 2025, up from $298M for the three months ended December 31, 2024; effective tax rate declined to 23.3% from 24.3%.
- Year-to-date income tax expense: $832M for the nine months ended December 31, 2025, up from $669M for the nine months ended December 31, 2024; effective tax rate declined to 20.4% from 23.5%.
- Rate drivers: Fluctuations in the reported income tax rate are primarily attributed to changes in the business mix of earnings among various taxing jurisdictions and discrete tax items recognized in the quarters.
Net Income Attributable to Noncontrolling Interests
Noncontrolling interests composition: Net income attributable to noncontrolling interests for the three and nine months ended December 31, 2025 and 2024 primarily represents the proportionate results of third-party equity interests in ClarusONE Sourcing Services LLP, Vantage Oncology Holdings, LLC, and SCRI Oncology, LLC.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- Redeemable noncontrolling interests recognized: During the nine months ended December 31, 2025, the company initially recognized redeemable noncontrolling interests of $700M and $25M related to its acquisitions of Core Ventures and PRISM Vision, respectively.
- Quarterly fair value adjustments: Using a Monte Carlo simulation model, the company recorded adjustments to the redemption value of redeemable noncontrolling interests of an immaterial amount and $25M for the three months ended December 31, 2025 for PRISM Vision and Core Ventures, respectively, and $2M and $70M for the nine months ended December 31, 2025 for PRISM Vision and Core Ventures, respectively.
- Balance sheet classification: Redeemable noncontrolling interests are presented outside of stockholders' deficit in the Condensed Consolidated Balance Sheet.
Net Income Attributable to McKesson Corporation
- Net income: Net income attributable to McKesson Corporation was $1.2B for the three months ended December 31, 2025 vs. $879M for the three months ended December 31, 2024, and $3.1B for the nine months ended December 31, 2025 vs. $2B for the nine months ended December 31, 2024.
- Diluted EPS: Diluted earnings per common share attributable to McKesson Corporation was $9.59 for the three months ended December 31, 2025 vs. $6.95 for the three months ended December 31, 2024, and $24.73 for the nine months ended December 31, 2025 vs. $15.80 for the nine months ended December 31, 2024; figures include the cumulative effects of share repurchases during each period.
Weighted-Average Diluted Common Shares Outstanding
- Weighted-average diluted shares: 123.7 million for the three months ended December 31, 2025 (vs. 126.6 million for three months ended December 31, 2024) and 124.5 million for the nine months ended December 31, 2025 (vs. 128.8 million for nine months ended December 31, 2024).
- Driver of decline: The year-over-year decrease in both periods is attributed primarily to the cumulative effect of share repurchases.
Overview of Segment Results:
Segment Revenues:
- Overall revenue growth: Total revenues grew 11% to $106.2B in the three months ended December 31, 2025, and 15% to $307.1B in the nine months ended December 31, 2025, compared to $95.3B and $268.2B in the respective prior-year periods.
- Oncology & Multispecialty standout: The fastest-growing segment, up 37% to $13B in Q3 and 30% to $35.7B year-to-date, versus $9.5B and $27.4B in the prior-year periods.
- North American Pharmaceutical scale: The largest segment at $88.3B in Q3 (up 9%) and $257.5B year-to-date (up 13%), versus $81.2B and $227.6B in the prior-year periods.
- Smaller segments: Prescription Technology Solutions grew 9%/11% to $1,500/$4.3B; Medical-Surgical Solutions grew 1%/1% to $2,991/$8.6B; Other grew 18%/14% to $335/$942M for the three and nine months ended December 31, 2025, respectively.
in millions
Three Months Ended December 31, 2025
North American Pharmaceutical83%+8.8%
Oncology & Multispecialty12%+37.0%
Prescription Technology Solutions1%+9.4%
Medical-Surgical Solutions3%+1.4%
Other0%+18.4%
Three Months Ended December 31, 2024
North American Pharmaceutical85%
Oncology & Multispecialty10%
Prescription Technology Solutions1%
Medical-Surgical Solutions3%
Other0%
| Segment | Three Months Ended December 31, 2025 | Three Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | $88,322 | $81,198 | +8.8% |
| Oncology & Multispecialty | $13,010 | $9,493 | +37.0% |
| Prescription Technology Solutions | $1,500 | $1,371 | +9.4% |
| Medical-Surgical Solutions | $2,991 | $2,949 | +1.4% |
| Other | $335 | $283 | +18.4% |
| Total | $106,158 | $95,294 | +11.4% |
North American Pharmaceutical
Three Months Ended December 31, 2025 vs. 2024
- North American Pharmaceutical revenue: Revenues for the three months ended December 31, 2025 increased $7.1B or 9% compared to the same prior year period.
- U.S. sales drivers: Sales to U.S. pharmacies and healthcare providers increased $7B, primarily due to higher volumes from retail national account customers, partially offset by branded to generic drug conversions.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Nine Months Ended December 31, 2025 vs. 2024
- North American Pharmaceutical revenue: Revenues for the nine months ended December 31, 2025 increased $30B or 13% compared to the same prior year period, driven primarily by higher volumes from retail national account customers, partially offset by branded to generic drug conversions; sales to U.S. pharmacies and healthcare providers increased $29.8B.
Oncology & Multispecialty
Three Months Ended December 31, 2025 vs. 2024
- Oncology & Multispecialty revenue: Revenues for the three months ended December 31, 2025 increased $3.5B or 37% 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.
Nine Months Ended December 31, 2025 vs. 2024
- Oncology & Multispecialty revenue: Revenues for the nine months ended December 31, 2025 increased $8.3B or 30% 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 December 31, 2025 vs. 2024
- RxTS revenue: Revenues for the three months ended December 31, 2025 increased $129M or 9% compared to the same prior year period, driven by increased volumes from third-party logistics and higher technology services revenues.
Nine Months Ended December 31, 2025 vs. 2024
RxTS revenue: RxTS revenues for the nine months ended December 31, 2025 increased $433M or 11% 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 December 31, 2025 vs. 2024
- Revenue growth: Medical-Surgical Solutions revenues for the three months ended December 31, 2025 increased $42M or 1% compared to the same prior year period.
- Revenue drivers: Ambulatory care customer sales increased $27M driven by underlying business growth and extended care customer sales increased $18M, partially offset by other sales which decreased $3M.
Nine Months Ended December 31, 2025 vs. 2024
- Medical-Surgical Solutions revenue: Revenue for the nine months ended December 31, 2025 increased $112M or 1% compared to the same prior year period, driven by a $93M increase in sales to ambulatory care customers from underlying business growth, a $15M increase in other sales, and a $4M increase in sales to extended care customers.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Other Segment Expense, Segment Operating Profit and Corporate Expenses, Net:
- Segment operating profit growth: Total segment operating profit (subtotal) rose 32% to $1.9B for the three months ended December 31, 2025 (vs. $1.4B prior year) and 37% to $4.9B for the nine months ended December 31, 2025 (vs. $3.6B prior year), with North American Pharmaceutical (+42% / +39%), Oncology & Multispecialty (+50% / +54%), Prescription Technology Solutions (+19% / +21%), and Other (+121% / +64%) all posting strong gains; Medical-Surgical Solutions was flat to slightly negative (−1% / +28%).
- Corporate expenses and income before taxes: Corporate expenses, net increased 44% to ($223M) in Q3 FY2026 and 24% to ($623M) for the nine months; interest expense declined 6% to ($63M) and 15% to ($186M), respectively; income before income taxes reached $1.6B (+33%) for the quarter and $4.1B (+43%) for the nine months.
- Segment operating profit margins: North American Pharmaceutical margin expanded 27 bp to 1.19% (Q3) and 18 bp to 0.97% (nine months); Oncology & Multispecialty expanded 21 bp to 2.34% (Q3) and 36 bp to 2.37% (nine months); Prescription Technology Solutions expanded 143 bp to 17.40% (Q3) and 142 bp to 17.59% (nine months); Other expanded 430 bp to 9.25% (Q3); Medical-Surgical Solutions contracted 26 bp to 8.86% (Q3) but expanded 170 bp to 8.17% (nine months).
- North American Pharmaceutical segment expense items: Notable items within other segment expense, net include: a $10M LIFO credit in Q3 FY2026 vs. an $89M charge in Q3 FY2025 (nine months: $28M credit vs. $85M charge); antitrust legal settlement cash receipts of $15M (Q3 FY2026) and $23M (nine months FY2026) vs. $31M and $184M in the comparable prior-year periods; a $29M net charge in the nine months ended December 31, 2025 related to the Rite Aid bankruptcy; and in the prior-year nine-month period, a $604M charge to remeasure Canadian retail disposal group assets/liabilities to fair value less costs to sell and $67M of restructuring charges.
Other segment expense, net
in millions
| Line item | Three Months Ended December 31, 2025 | Three Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | 87,267 | 80,454 | +8.5% |
| Oncology & Multispecialty | 12,706 | 9,291 | +36.8% |
| Prescription Technology Solutions | 1,239 | 1,152 | +7.6% |
| Medical-Surgical Solutions | 2,726 | 2,680 | +1.7% |
| Other | 304 | 269 | +13.0% |
Other segment expense, net (Nine Months)
in millions
| Line item | Nine Months Ended December 31, 2025 | Nine Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | 255,031 | 225,771 | +13.0% |
| Oncology & Multispecialty | 34,864 | 26,881 | +29.7% |
| Prescription Technology Solutions | 3,552 | 3,250 | +9.3% |
| Medical-Surgical Solutions | 7,933 | 7,975 | -0.5% |
| Other | 870 | 785 | +10.8% |
Segment operating profit
in millions
| Line item | Three Months Ended December 31, 2025 | Three Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | 1,055 | 744 | +41.8% |
| Oncology & Multispecialty | 304 | 202 | +50.5% |
| Prescription Technology Solutions | 261 | 219 | +19.2% |
| Medical-Surgical Solutions | 265 | 269 | -1.5% |
| Other | 31 | 14 | +121.4% |
| Corporate expenses, net | (223) | (155) | +43.9% |
| Interest expense | (63) | (67) | -6.0% |
| Income before income taxes | 1,630 | 1,226 | +33.0% |
Segment operating profit (Nine Months)
in millions
| Line item | Nine Months Ended December 31, 2025 | Nine Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| North American Pharmaceutical | 2,501 | 1,793 | +39.5% |
| Oncology & Multispecialty | 848 | 550 | +54.2% |
| Prescription Technology Solutions | 758 | 627 | +20.9% |
| Medical-Surgical Solutions | 706 | 552 | +27.9% |
| Other | 72 | 44 | +63.6% |
| Corporate expenses, net | (623) | (502) | +24.1% |
| Interest expense | (186) | (220) | -15.5% |
| Income before income taxes | 4,076 | 2,844 | +43.3% |
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- U.S. Pharmaceutical segment (opioid charge): A charge of $57M for the nine months ended December 31, 2024 was recorded related to the estimated liability for opioid-related claims.
- Oncology & Multispecialty segment: Other segment expense, net included a net gain of $51M for the nine months ended December 31, 2025 related to the sale of an investment and market decisions, and a loss of $43M for the nine months ended December 31, 2024 related to one of the Company's equity method investments.
- Medical-Surgical Solutions segment: Other segment expense, net for the nine months ended December 31, 2024 included restructuring charges of $169M related to a broad set of initiatives to drive operational efficiencies and increase cost optimization efforts.
- Corporate expenses: Notable items for the nine months ended December 31, 2024 included a $62M charge from accumulated other comprehensive loss components related to the Canadian retail disposal group, a net gain of $101M on investments in equity securities of certain U.S. growth stage healthcare companies, and a net charge of $51M for estimated opioid-related liability; corporate restructuring charges were $38M and $10M for the three months ended December 31, 2025 and 2024, respectively, and $105M and $34M for the nine months ended December 31, 2025 and 2024, respectively.
North American Pharmaceutical
Three Months Ended December 31, 2025 vs. 2024
- Operating profit drivers: Operating profit for the segment increased for the three months ended December 31, 2025 vs. the prior year period, driven by the disposition of rebate liabilities and vendor credits related to the bankruptcy of Rite Aid, higher pharmaceutical distribution volumes across the segment, and a LIFO credit in the current year compared to a charge in fiscal 2025.
- Partial offsets: The increase was partially offset by an increase in operating expenses to support higher volumes and a decrease from net cash proceeds received representing the company's share of antitrust legal settlements.
Nine Months Ended December 31, 2025 vs. 2024
- Operating profit drivers: Segment operating profit increased for the nine months ended December 31, 2025 vs. the prior year period, primarily driven by prior year remeasurement charges related to the Canadian retail disposal group held for sale, higher pharmaceutical distribution volumes across the segment, a LIFO credit in the current year compared to a charge in fiscal 2025, and a prior year charge of $57M related to estimated liability for opioid-related claims.
- Partial offsets: Increases were partially offset by the impact of the bankruptcy of Rite Aid, a decrease from net cash proceeds received representing the company's share of antitrust legal settlements, and an increase in operating expenses to support higher volumes.
Oncology & Multispecialty
Three Months Ended December 31, 2025 vs. 2024
Segment operating profit: Operating profit increased for the three months ended December 31, 2025 compared to the same prior year period, driven primarily by growth in specialty pharmaceuticals, partially offset by an increase in operating expenses to support higher volumes.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Nine Months Ended December 31, 2025 vs. 2024
- Segment operating profit: Operating profit increased for the nine months ended December 31, 2025 vs. the prior year period, 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 December 31, 2025 vs. 2024
- Operating profit driver: Operating profit for the segment increased for the three months ended December 31, 2025 compared to the same prior year period, driven by increased volumes primarily from growth in technology services.
Nine Months Ended December 31, 2025 vs. 2024
Operating profit driver: Operating profit for this segment increased for the nine months ended December 31, 2025 compared to the same prior year period, driven by increased volumes primarily from growth in technology services.
Medical-Surgical Solutions
Three Months Ended December 31, 2025 vs. 2024
- Operating profit: Operating profit for this segment decreased for the three months ended December 31, 2025 compared to the same prior year period, primarily due to a decline in the contribution from the ambulatory care and extended care businesses, partially offset by higher restructuring charges in fiscal 2025.
Nine Months Ended December 31, 2025 vs. 2024
- Segment operating profit: Increased for the nine months ended December 31, 2025 vs. the same prior year period, driven primarily by higher restructuring charges in fiscal 2025 and lower expenses resulting 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 December 31, 2025 vs. 2024
Corporate expenses, net: Increased for the three months ended December 31, 2025 compared to the same prior year period, primarily due to higher restructuring charges in fiscal 2026, partially offset by prior year remeasurement charges related to the Canadian retail disposal group held for sale.
Nine Months Ended December 31, 2025
- Corporate expenses, net: Increased for the nine months ended December 31, 2025 compared to the same prior year period, primarily driven by higher restructuring charges in fiscal 2026 and prior year gains related to investments in equity securities of certain U.S. growth stage companies in the healthcare industry, 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 REVIEW (CONTINUED)
(UNAUDITED)
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
- Liquidity adequacy: Management expects available cash from operations and the short-term investment portfolio, together with the $4B revolving credit facility, $1B 364-day credit facility, commercial paper program, and other borrowings, to be sufficient to fund short-term and long-term capital expenditures, working capital, and other cash requirements.
- Debt covenant compliance: At December 31, 2025, the company was in compliance with all debt covenants and believes it has the ability to continue to meet those covenants in the future.
in millions
| Line item | Nine Months Ended December 31, 2025 | Nine Months Ended December 31, 2024 | YoY |
|---|---|---|---|
| Operating activities | 2,734 | (1,663) | -264.4% |
| Investing activities | (3,857) | (509) | +657.8% |
| Financing activities | (1,811) | (1,110) | +63.2% |
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 31 | (21) | -247.6% |
| Net change in cash, cash equivalents, and restricted cash | (2,903) | (3,303) | -12.1% |
Operating Activities
- Operating cash flow: Operating activities provided cash of $2.7B for the nine months ended December 31, 2025, compared to cash used of $1.7B in the same prior year period, a $4.4B year-over-year increase.
- Earnings and non-cash items: Net income increased by $1.1B, partially offset by lower net non-cash items of $708M compared to the same prior year period.
- Working capital drivers: Accounts payable contributed a $2.2B cash increase from vendor payment scheduling and period-end timing, partially offset by a $1B decrease from higher inventory requirements; accounts receivable contributed a $1.9B net cash increase due to favorable timing of collections and period-end day-of-week effects.
- Other assets and liabilities: Additional cash improvement came from other assets and liabilities, primarily related to lower contract liability payments.
Investing Activities
- Cash used in investing: Investing activities used $3.9B in the nine months ended December 31, 2025, compared to $509M in the nine months ended December 31, 2024.
- Acquisitions: The nine months ended December 31, 2025 included $3.4B of net cash payments for acquisitions, comprising $2.5B for Core Ventures and $875M for PRISM Vision.
- Capital expenditures: Capital expenditures for property, plant, and equipment and capitalized software were $560M in the nine months ended December 31, 2025, compared to $581M in the nine months ended December 31, 2024.
- Proceeds from divestitures: Investing activities in the nine months ended December 31, 2025 included $137M in proceeds from the sale of businesses and investments.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
- Investing activities: Investing activities for the nine months ended December 31, 2024 were impacted by the receipt of proceeds of $92M related to the sale of equity securities.
Financing Activities
- Overall financing cash use: Financing activities used cash of $1.8B and $1.1B during the nine months ended December 31, 2025 and 2024, respectively, driven primarily by share repurchases of $2.1B and $2.8B, and dividends of $280M and $254M, respectively.
- Commercial paper activity: Financing activities included cash receipts of $2.3B and $11.4B, and cash payments of $2.3B and $9B for the nine months ended December 31, 2025 and 2024, respectively, related to short-term borrowings of commercial paper.
- May 2025 debt offering: On May 30, 2025, the company completed a public debt offering comprising 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), generating total net proceeds of $2B, which were used to fund the purchase of its interest in Core Ventures.
- Note maturities and prior-year refinancing: On November 14, 2025, €600 million of 1.50% Notes matured, and on December 3, 2025, $500M of 0.90% Notes matured, both repaid using cash on hand; in the prior year, a September 10, 2024 offering of 4.25% Notes due September 15, 2029 ($500M principal, ~$496M net proceeds) was used along with cash on hand to redeem $500M of 5.25% Notes due February 15, 2026 at 100% of principal plus accrued interest.
Share Repurchase Plans
- Repurchase authorization: The Board has authorized repurchases of common stock via open market transactions, privately negotiated transactions, accelerated share repurchase programs, or combinations thereof, which may use 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 tax accruals: Excise taxes of $7M were accrued for shares repurchased in each of the three months ended December 31, 2025 and 2024; for the nine months ended December 31, 2025 and 2024, accruals were $17M and $23M, respectively.
- Excise tax payment and balance: A payment of $26M for fiscal 2025 excise taxes previously accrued was made on July 30, 2025; as of December 31, 2025 and March 31, 2025, excise tax accruals within "Other accrued liabilities" were $17M and $26M, respectively.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Boilerplate only. Nothing of substance to surface.
Number of
Shares
- Repurchase program balance: Authorization stood at $7.5B at March 31, 2025 and declined to $5.4B at December 31, 2025 after $2.1B in aggregate open-market repurchases across the three quarters.
- Quarterly activity: Q1 repurchased 0.8 million shares at an average of $709.84/share ($590M); Q2 repurchased 1.2 million shares at an average of $693.25/share ($809M); Q3 repurchased 0.8 million shares at an average of $831.33/share ($689M).
- Excise taxes and settlement timing: The average price paid per share includes $17M of excise taxes for the nine months ended December 31, 2025; $9M of the Q3 total was accrued within "Other accrued liabilities" as of December 31, 2025 for repurchases executed in late December 2025 and settled in early January 2026.
- Exclusions: The table excludes the value of equity awards surrendered to satisfy tax withholding obligations or forfeitures of equity awards.
Number of
Shares
- Share repurchase activity: Over the nine months ended December 31, 2024, McKesson repurchased a total of approximately 5.4 million shares in open market transactions: 1.0 million shares at an average price of $548.20 in Q1, 2.9 million shares at an average price of $533.46 in Q2, and 1.5 million shares at an average price of $537.48 in Q3.
- Program capacity: The approximate dollar value of shares remaining available for repurchase under the programs increased from $6.6B at March 31, 2024 to $7.7B at December 31, 2024, reflecting a $4B July 2024 Board Authorization partly offset by $2.9B in repurchases during the period.
- Excise taxes and settlement: The average price paid per share includes $23M of excise taxes for the nine months ended December 31, 2024; $8M of Q3 repurchases was accrued within "Other accrued liabilities" as of December 31, 2024 for trades executed in late December 2024 and settled in early January 2025.
- Exclusions: The table excludes equity awards surrendered to satisfy tax withholding obligations and forfeitures of equity awards.
FINANCIAL REVIEW (CONTINUED)
(UNAUDITED)
Selected Measures of Liquidity and Capital Resources
- Cash and working capital: Cash, cash equivalents, and restricted cash declined to $3.1B at December 31, 2025 from $6B at March 31, 2025; working capital deteriorated to ($8.4B from ($6.2B, primarily due to an increase in drafts and accounts payable from increased purchasing driven by increased sales and timing, a decrease in cash and cash equivalents, and an increase in other accrued liabilities, partially offset by an increase in inventories, net, and receivables, net, driven by higher sales and timing, and a decrease in the current portion of long-term debt.
- Debt to capital ratio: Declined to 106.4% at December 31, 2025 from 125.3% at March 31, 2025, driven by net income attributable to McKesson for fiscal 2026 and issuance of new long-term debt, partially offset by share repurchases, dividend payments, and repayment of long-term debt upon maturity; this ratio is computed as total debt divided by total debt plus McKesson stockholders' deficit, excluding noncontrolling interests and accumulated other comprehensive loss.
- Foreign cash: Approximately $1.2B of the December 31, 2025 cash balance was held by subsidiaries outside the U.S. (vs. approximately $2.9B at March 31, 2025); management's primary intent is to utilize this cash for foreign operations indefinitely, though most of it is available for repatriation, and management does not anticipate any tax impact from remitting these earnings to be material.
- Dividends: Quarterly dividend was raised from $0.71 to $0.82 per share of common stock effective July 29, 2025; future payment and amount remain within the Board's discretion and will depend on future earnings, financial condition, capital requirements, legal requirements, and other factors.
in millions
| Line item | December 31, 2025 | March 31, 2025 | YoY |
|---|---|---|---|
| Cash, cash equivalents, and restricted cash | 3,053 | 5,956 | -48.7% |
| Working capital | (8,434) | (6,206) | +35.9% |
| Debt to capital ratio (%) | 106 | 125 | -15.1% |
Redeemable Noncontrolling Interests
- New recognitions: During the nine months ended December 31, 2025, redeemable noncontrolling interests of $25M and $700M were initially recognized in connection with the acquisition of 80% of PRISM Vision and 70% of Core Ventures, respectively.
- Measurement and classification: The balance is reported at the greater of carrying value or 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.
- Valuation methodology: Fair value is determined quarterly using a Monte Carlo simulation model; the resulting adjustment to redemption value for the period was an immaterial amount.
McKESSON CORPORATION
FINANCIAL REVIEW (CONCLUDED)
(UNAUDITED)
- Redeemable noncontrolling interests: Amounts attributable to PRISM Vision and Core Ventures were $25M and $25M, respectively, for the three months ended December 31, 2025, and $2M and $70M, respectively, for the nine months ended December 31, 2025.
Capital Resources
- Funding sources: Working capital requirements are funded primarily with cash and cash equivalents, commercial paper issuances, and longer-term credit agreements and debt offerings; long-term debt markets and commercial paper markets are described as open and accessible.
- Future cash requirements: 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 December 31, 2025 payable under opioid-related settlement agreements — are expected to be met by existing cash balances, cash flow from operations, existing credit sources, and future borrowings.
- Liquidity adequacy: Management believes that 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 can be given against volatility or disruption in global capital and credit markets impairing liquidity or increasing 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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