MCK · Q2 2026 Earnings

Bullish

McKesson Corporation

Reported November 5, 2025

30-second summary

McKesson delivered $103.2B revenue (+10% YoY) and $9.86 adjusted EPS in Q2, then raised FY26 adjusted EPS guidance by $0.30 at the midpoint to $38.35–$38.85 — on top of the $0.80 raise at September's Investor Day, for $1.10 cumulative since Q1. The headline strategic shift: management formally targeted an IPO of the Medical-Surgical business for H2 calendar 2027, with a subsequent spin/split to exit the residual stake. Guidance was refined across the board under the new segment structure — Oncology & Multispecialty is now its own reported segment growing 32% to $12.0B, FCF ($4.4–$4.8B) and the $2.5B buyback plan were reaffirmed, interest expense was lowered to $210–$240M, and the tax rate tightened to 18–19%. Operating profit growth guide raised 300bps at both ends to +12–16%.

Headline numbers

EPS

Q2 FY2026

$9.86

Revenue

Q2 FY2026

$103.15B

+10.0% YoY

Gross margin

Q2 FY2026

3.4%

Free cash flow

Q2 FY2026

$2.20B

Operating margin

Q2 FY2026

1.4%

Key financials

Q2 FY2026

Metric	Q2 FY2026	YoY	Q1 FY2026	QoQ
Revenue	$103.15B	+10.0%	$97.80B	+5.5%
EPS	$9.86	—	$8.26	+19.4%
Gross margin	3.4%	—	3.4%	+3bps
Operating margin	1.4%	—	1.1%	+27bps
Free cash flow	$2.20B	—	$-1.10B	+300.0%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted EPS	FY2026	$37.10 to $37.90	$38.35 to $38.85	+$1.25 to +$0.95 (midpoint +$1.10)	Raised
Adjusted EPS growth	FY2026	12% to 15% growth (14% to 17% excluding McKesson Ventures gains)	16% to 18% growth	+1 to +6 percentage points	Raised
Operating profit growth	FY2026	9% to 13%	12% to 16%	+3 percentage points at both ends	Raised
Free Cash Flow	FY2026	$4.4 billion to $4.8 billion	Withdrawn — no replacement	—	Withdrawn
Interest expense	FY2026	$260 million to $290 million	Withdrawn — no replacement	—	Withdrawn
Effective tax rate	FY2026	17% to 19%	Withdrawn — no replacement	—	Withdrawn
Share repurchase	FY2026	approximately $2.5 billion	Withdrawn — no replacement	—	Withdrawn
U.S. Pharmaceutical revenue growth	FY2026	12% to 16%	Withdrawn — no replacement	—	Withdrawn
U.S. Pharmaceutical operating profit growth	FY2026	High end of 12% to 16% range	Withdrawn — no replacement	—	Withdrawn
Prescription Technology Solutions revenue growth	FY2026	8% to 12%	Withdrawn — no replacement	—	Withdrawn
Prescription Technology Solutions operating profit growth	FY2026	9% to 13%	Withdrawn — no replacement	—	Withdrawn
Medical-Surgical Solutions revenue growth	FY2026	2% to 6%	Withdrawn — no replacement	—	Withdrawn
Medical-Surgical Solutions operating profit growth	FY2026	2% to 6%	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Revenue growth (11% to 15%)

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	YoY
North American Pharmaceutical	$86.48B	+8.0%
Oncology & Multispecialty	$12.04B	+32.0%
Prescription Technology Solutions	$1.38B	+9.0%
Medical-Surgical Solutions	$2.95B	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026
Adjusted Segment Operating Profit Margin - North American Pharmaceutical	0.98%
Adjusted Segment Operating Profit Margin - Oncology & Multispecialty	3.30%
Adjusted Segment Operating Profit Margin - Prescription Technology Solutions	18.97%
Adjusted Segment Operating Profit Margin - Medical-Surgical Solutions	8.45%
Cash Flow from Operations	$2.4B
Free Cash Flow	$2.2B
Adjusted Earnings Growth YoY	39%
Share Repurchases (H1 FY2026)	$1.4B

Management tone

Q3 FY25 anchor (defensive ops) → Q4 FY25 anchor (acquisition pivot) → Q1 FY26 anchor (Norway-driven EPS raise + capital aggression) → Q2 FY26 anchor (Med-Surg separation timeline + operational raise).

Medical-Surgical's framing has now completed a full arc from core to separable. Last quarter we flagged that the segment had been reframed from passive divest candidate to active operating leverage story, with 22% segment operating profit growth and automation proof points. This quarter management committed to a concrete exit path: "We're targeting to exit the medical surgical solutions business through an initial public offering... We anticipate that this separation could be completed by the second half of calendar 2027." The shift signals management has decided the leverage story isn't enough to justify portfolio inclusion — Q2's 0% revenue growth likely reinforced that.

Oncology has moved from bolt-on to flywheel to designated growth pillar. Q4 FY25 introduced Core Ventures flywheel language; Q1 framed oncology as a structural growth driver; this quarter it's a discrete reporting segment with explicit +27–31% revenue and +49–53% operating profit growth targets. The CEO: "Our differentiated specialty platform remains a central pillar of our growth strategy and is now reported within the newly established oncology and multispecialty segment." The org structure has caught up to the strategy — this is now where capital and disclosure are concentrated.

The EPS guide raise is now operational, not mechanical. Last quarter's $0.20 raise was Norway held-for-sale accounting, which we called out explicitly; the CFO noted this quarter that full-year Norway accretion was revised down to $0.13 from the prior $0.20. This quarter's $0.30 raise (and the $0.80 Investor Day raise before it) traces to genuine adjusted earnings growth of 39% YoY, with operating profit growth guidance lifted 300bps at both ends to +12–16%. The CFO: "Following our strong first half performance, sustained momentum across our portfolio, and confidence in the outlook for the remainder of the year, we are raising our fiscal 2026 Adjusted Earnings per Diluted Share guidance." The Investor Day raise plus this quarter's raise marks the most assertive in-year posture in several cycles.

Cost discipline has been reframed from defense to AI-enabled offense. Q1 emphasized 450bps of opex/gross profit improvement; Q2 widens that to 570bps and explicitly ties it to AI. The CFO: "Our unrelenting focus on cost, discipline, and operational efficiency, powered by a technology-first mindset and AI-driven modernization, continues to create value." The CEO offered a concrete proof point: "What would have normally taken eight physical human touches to complete a pick, pack, and ship process now only takes two human touches." This is the same automation thesis from Q1 but now claimed as a structural moat rather than a one-time efficiency cycle.

Disclosure has been re-cut, not reduced. The new segment structure (Oncology & Multispecialty broken out; North American Pharmaceutical formed from U.S. + Canada distribution) replaces the prior U.S. Pharmaceutical and International views. The CFO walked through segment-level revenue and operating profit guidance for every segment, plus FCF, interest expense, tax rate, corporate expenses, NCI, and share count. Net effect: more transparency into growth pillars, with FCF and capital-return targets intact.

Recurring themes management leaned on this quarter:

Oncology and multispecialty as accelerating growth pillarGLP-1 demand momentum and integration across segmentsOperational leverage and automation-driven margin expansionPortfolio transformation and strategic clarity driving shareholder valueSpecialty distribution and provider network expansionTechnology modernization and AI-enabled solutions as competitive moat

Risks management surfaced:

Illness season variability and lower than anticipated vaccine/testing volumes in medical-surgical segmentGLP-1 revenue growth may vary quarter to quarterPrescription technology solutions revenue and profit trajectory may vary quarter to quarter based on product launches, utilization trends, and payer requirementsSeparation of medical-surgical business subject to market conditions and regulatory approvalsPolicy and regulatory backdrop in dynamic healthcare environment

Q&A highlights

Brian Tankulic · Jefferies

Asked about strong oncology and multi-specialty results while maintaining guidance, questioning whether the beat was already contemplated in prior investor day expectations.

Management noted that non-recurring gains (three items) were mostly known at investor day with one having different timing. Organic business growing ~13% YoY in line with long-term guidance. Acquisitions (Florida Cancer Specialists and PRISM) performing well and driving about half of segment growth, with PRISM showing slightly ahead of expectations.

Organic oncology/multi-specialty growth ~13% YoYAbout 50% of segment growth from acquisitionsPRISM performing slightly ahead of original EPS accretion guidance ($0.20-$0.30)Florida Cancer Specialists in line with guidance ($0.40-$0.60)

Kevin Caliendo · UBS

Questioned implied second-half pharma segment growth of ~3.5% vs. first-half >11%, asking what drivers explain the dramatic deceleration beyond investments.

Management attributed deceleration to two specific items: (1) one new strategic customer that started in Q2 FY2025 provides one extra quarter of operations in H1, and (2) Canada Rexall/Well.ca exit last year created held-for-sale accounting accretion in prior year comparables that won't repeat in H2.

New strategic customer onboarded in Q2 FY2025 (one extra quarter in H1 comparison)Canada Rexall and Well.ca exit created held-for-sale accounting accretion in prior yearThese are the primary drivers of H1 vs H2 growth variance

Charles Rhee · TD Cowen

Asked for tax rate guidance for second half of year given Q1 at 21%+, Q2 at 17.5%, and full-year guidance of 18-19%.

Management provided specific quarterly guidance: Q3 expected at 23-25%, with Q4 expected lower. Explained that income mix and timing of discrete items drive quarterly variation. Adjusted full-year guidance to 18-19% (from prior 17-19%) due to higher anticipated H2 rate driven by discreet timing.

Q3 tax rate guidance: 23-25%Q4 expected to be lower due to discrete timing and income mixFull-year guidance raised to 18-19% from prior 17-19%H2 rate expected to be slightly higher than previously guided at Investor Day

Daniel Grosslight · Citi

Asked about impact of potential increase in uninsured/cash-pay patients (via TrumpRx initiatives) on prior authorization and Arch2S businesses, and whether company plans to integrate with TrumpRx platform.

Management noted direct-to-patient pharmacy has existed 10+ years and eligible population remains small; not anticipating material impact on prior auth business. Company has tools for patient interface and automation but sees limited near-term impact. Stated commitment to work with Trump administration on healthcare cost/access solutions but gave no specifics on TrumpRx integration.

Direct-to-patient pharmacy model not new (10+ years in market)Eligible population for discounted prices remains smallNo material impact anticipated on prior authorization business in guidanceCompany has tools for patient interface, automation, last-mile delivery but not currently heavily leveraged

Alan Letts · Bank of America

Noted three consecutive quarters of YoY SG&A decline and accelerating gross profit; asked for guidance on trajectory of both metrics in second half of FY26.

Management attributed SG&A declines to Canada business exit (removing gross expense base) and improved mix from higher-margin technology businesses. Emphasized ongoing operating expense leverage from prior technology/automation investments now coming online, plus continued focus on AI and modernization. Gross margin benefiting from 20% RxDS growth and technology-first strategy.

Canada Rexall/Well.ca exit removed gross operating expensesMore favorable business mix post-exitRxDS grew 20% in quarter (technology-based business)Operating leverage from prior years' automation and digital investments now materializing

Answers to last quarter's watch list

Whether PTS or Medical-Surgical guides get raised in Q2. PTS was raised on both lines (revenue +9–13% from +8–12%, op profit +13–17% from +9–13%); Med-Surg softened to the low end of +2–6% on both lines. PTS Q2 came in at +9% revenue, Med-Surg at 0% (vaccine/illness-season headwind ~4%). Status: Resolved — PTS raised, Med-Surg softened.

U.S. Pharmaceutical operating profit cadence vs. the "high end of 12–16%" framing. Re-cut under the new structure: the North American Pharmaceutical segment (which adds Canada to former U.S. Pharma minus Oncology) now guides to +10–14% revenue and +5–9% op profit. Q&A confirmed H2 will run ~3.5% on comping headwinds. The prior "high end of 12–16%" framing has been superseded by the new segment math. Status: Resolved (new framing).

GLP-1 revenue trajectory and quarter-to-quarter volatility. GLP-1 revenue was $13.2B in Q2 (+24% YoY, +$2.6B), up 6% sequentially from Q1's $12.1B — sequentially higher with growth rate decelerating from Q1's +38%. Management continues to caveat quarter-to-quarter variability but frames GLP-1 as a sustained tailwind. Status: Continue monitoring.

Prism Vision and Core Ventures contribution disclosure. Q&A clarified that ~50% of Oncology & Multispecialty segment operating profit growth is from acquisitions (PRISM + Core Ventures), with organic at ~13%. PRISM is tracking slightly ahead of its $0.20–0.30 EPS accretion guide; FCS is in line with $0.40–0.60. Cleaner than Q1 disclosure. Status: Resolved positively.

Free cash flow build. Q2 FCF was $2.2B vs. Q1's -$1.1B as expected seasonally — H1 cumulative is $1.1B against the reaffirmed $4.4–4.8B FY guide, implying H2 ~$3.3–$3.7B. H1 buybacks of $1.4B track toward the reaffirmed $2.5B FY pace. Status: Resolved positively.

Medical-Surgical separation timing and any updated structural commentary. Definitive answer: IPO targeted for H2 calendar 2027, followed by spin/split for residual stake, subject to market conditions and regulatory approvals. This is the largest strategic disclosure of the quarter. Status: Resolved positively (on clarity).

What to watch into next quarter

Q3 North American Pharmaceutical revenue growth vs. the "H2 ~3.5%" implied trajectory. If Q3 prints meaningfully below the implied run-rate, the "comping items" explanation (new customer, Canada Rexall) doesn't hold and demand-side concerns become real.

Oncology & Multispecialty organic growth disclosure. Management confirmed ~13% organic this quarter. Watch whether next quarter's print sustains organic growth at or above that mark, or whether the segment's headline 32% growth was front-loaded by PRISM and Core Ventures contribution.

Free cash flow conversion against the reaffirmed $4.4–$4.8B guide. H1 cumulative was $1.1B, implying H2 needs ~$3.3–$3.7B — heavy but consistent with prior-year seasonality. Watch Q3 cash conversion as the leading indicator.

Med-Surg IPO disclosures — separation costs, leverage targets, and capital structure language. With H2 CY2027 as the target window, FY26 Q3 should begin showing transaction-prep disclosures (carve-out financials, allocation methodology). Absence of any movement here would suggest the timeline is softer than stated.

GLP-1 sequential trajectory. $12.1B → $13.2B in two quarters with deceleration from +38% to +24% YoY. Watch whether sequential growth flattens or reverses; biosimilar dynamics and payer-policy changes flagged in prior cycles haven't materialized yet but remain the asymmetric downside risk.

PTS investment cadence in H2. CFO flagged higher H2 investment spending in PTS embedded in the raised guide. Watch whether the raised +13–17% op profit growth holds against that step-up.

Sources

McKesson Q2 FY2026 Earnings Press Release (SEC Exhibit 99.1, period ended September 30, 2025): https://www.sec.gov/Archives/edgar/data/927653/000092765325000138/mck_exhibit991x9302025.htm
McKesson Q2 FY2026 earnings call transcript (Q&A and management commentary)

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