McKesson Corporation MCK reported first-quarter fiscal 2027 adjusted earnings per share (EPS) of $9.93, up 20% year over year. The figure beat the Zacks Consensus Estimate of $9.44 by 5.2%, driven by strong operational growth in North American Pharmaceutical and Oncology & Multispecialty, along with a lower share count.
GAAP EPS was $5.15 in the first quarter of fiscal 2027, down 18% from $6.25 in the year-ago quarter. The decline primarily reflected a $293 million redemption value adjustment related to redeemable noncontrolling interests in the Medical-Surgical Solutions segment. This impact was partly offset by organic growth across the enterprise and the absence of the prior-year $189 million pre-tax bad-debt provision tied to the Rite Aid bankruptcy.
MCK's Revenue Details
Revenues rose 8% to $105.38 billion and surpassed the consensus estimate of $104.39 billion by 1%. GLP-1 medication distribution revenues increased 24% year over year to $15 billion.
The top line benefited from higher prescription volumes in North American Pharmaceutical and continued strength in oncology and multispecialty. Growth in specialty products and provider solutions also supported the quarterly performance.
These gains were partially offset by lower branded pharmaceutical pricing following wholesale acquisition cost reductions in January 2026 and branded-to-generic conversions. Management noted that the decline in branded pricing affected revenues but did not have a meaningful impact on operating profit.
Shares of MCK gained 1.7% in after-hours trading on Aug. 5, following better-than-expected sales and EPS performance as well as raised guidance. The stock has risen 6.9% year to date compared with the industry’s 2.1% growth. The S&P 500 Index has advanced 13.2% over the same period.
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McKesson's Q1 Segmental Analysis
Revenues from the North American Pharmaceutical segment increased 5% year over year to $86.77 billion. Growth reflected higher prescription transaction volumes, including increased specialty product volumes, partly offset by lower contributions from branded pharmaceuticals.
Adjusted segment operating profit climbed 19% to $894 million. The improvement was driven by specialty product distribution to health systems and strategic accounts, as well as the timing of new product launches.
Oncology & Multispecialty revenues surged 33% to $14.22 billion, supported by growth in provider solutions and specialty distribution, including contributions from acquisition. Excluding Core Ventures, revenues increased approximately 24%.
Adjusted segment operating profit jumped 41% to $405 million. Excluding Core Ventures, operating profit grew approximately 15%, aided by higher specialty distribution volumes and organic and new business growth in provider solutions.
Prescription Technology Solutions revenues rose 9% to $1.57 billion, reflecting higher prescription volumes in third-party logistics and access solutions. Adjusted operating profit advanced 13% to $303 million on higher demand for access solutions, including prior authorization services.
Medical-Surgical Solutions revenues increased 4% to $2.82 billion, driven by growth across alternate sites of care and higher specialty pharmaceutical volumes. Adjusted operating profit declined 20% to $195 million due to product mix and one-time administrative expenses, partly offset by contributions from the extended care channel.
MCK's Margin
Adjusted gross profit increased 13% year over year to $3.68 billion. The adjusted gross margin expanded approximately 15 basis points to 3.49%, reflecting growth in North American Pharmaceutical and Oncology & Multispecialty.
Adjusted operating profit rose 16% to $1.65 billion. The adjusted operating margin improved roughly 11 basis points to 1.57%, as gross profit growth outpaced the 10% increase in adjusted operating expenses.
McKesson's Financial Update
McKesson ended the quarter with $5.16 billion in cash and cash equivalents, up from $3.98 billion at the end of fiscal 2026. Total liquidity was approximately $10 billion.
Cumulative net cash provided by operating activities was $6.16 billion against cumulative net cash used in operating activities of $6.09 billion in the year-earlier period. The capital expenditures totaled $152 million. This resulted in negative free cash flow of $372 million, although trailing 12-month free cash flow remained approximately $6.1 billion.
The company returned $2.6 billion to shareholders, including $2.5 billion through share repurchases and $102 million in dividends. Its board also approved a 15% quarterly dividend increase to 94 cents per share.
MCK Raises Fiscal 2027 Guidance
McKesson raised its fiscal 2027 adjusted earnings guidance to $44.20-$45.00 per share from the previous projection of $43.80-$44.60. The revised outlook implies growth of 13-15%.
The company continues to expect revenue growth of 5-9% and operating profit growth of 9-13%. North American Pharmaceutical operating profit growth is now anticipated at the high end of the prior 5.5-9.5% range.
McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote
Wrapping Up
McKesson exited the first quarter of fiscal 2027 on a strong note, with both earnings and revenues surpassing estimates. The company’s performance was broad-based, led by North American Pharmaceutical, Oncology & Multispecialty and Prescription Technology Solutions. Specialty distribution remained a key growth driver, supported by higher prescription volumes, provider-solution growth and continued demand for access services.
MCK’s oncology and multispecialty platform, along with its expanding biopharma services capabilities, continues to support operating momentum. The company completed the sale of an approximately 13% minority interest in Medical-Surgical Solutions to Apollo Funds for $1.25 billion. It also established a $2.25 billion secured term loan facility to support the planned separation.
McKesson announced Wellverse as the future standalone company’s name. The business is expected to begin operating under the new identity in January 2027 as part of a phased transition.
MCK’s Zacks Rank & Other Key Picks
McKesson currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are West Pharmaceutical WST, The Cooper Companies COO and Cardinal Health CAH, each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
West Pharmaceutical reported second-quarter 2026 adjusted earnings per share (EPS) of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.
West Pharmaceutical has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.40%.
The Cooper Companies reported a second-quarter fiscal 2026 adjusted EPS of $1.21, which beat the Zacks Consensus Estimate by 10.00%. Revenues of $1.08 billion beat the Zacks Consensus Estimate by 2.6%.
The Cooper Companies has an estimated long-term earnings growth rate of 8.3%. COO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.80%.
Cardinal Health reported a third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.
Cardinal Health has an estimated long-term earnings growth rate of 17%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.27%.
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This article originally published on Zacks Investment Research (zacks.com).