McKesson Corp, one of the leading pharmaceutical wholesalers in the U.S., reported its fiscal 2025 first-quarter earnings, showcasing a mixed performance. The company, which sources and distributes branded, generic, and specialty pharmaceutical products to various healthcare providers, also operates in Canada and supplies medical-surgical products and technology solutions for pharmacies.
Performance Overview
McKesson Corp (MCK, Financial) reported consolidated revenues of $79.3 billion for the first quarter, marking a 6% increase from the previous year. However, this figure fell short of the analyst estimate of $82.53 billion. The company's earnings per diluted share (EPS) stood at $7.00, a slight decrease from $7.02 in the same period last year. Adjusted EPS, however, rose by 8% to $7.88, surpassing the analyst estimate of $7.60.
Financial Achievements and Challenges
McKesson's Board of Directors approved a 15% increase in the quarterly dividend to $0.71 per share, marking the eighth consecutive year of dividend increases. Additionally, the Board authorized a $4.0 billion increase to the share repurchase program, bringing the total share repurchase authorization to $9.9 billion as of July 2024.
McKesson delivered Adjusted Earnings per Diluted Share growth of 8% in the first quarter. As a result of our first quarter performance and confidence for the remainder of the year, we are raising our guidance range for fiscal 2025 Adjusted Earnings per Diluted Share to $31.75 to $32.55," said Brian Tyler, chief executive officer.
Segment Performance
McKesson's U.S. Pharmaceutical segment, which accounts for a significant portion of its revenue, reported revenues of $71.7 billion, a 7% increase driven by higher prescription volumes and specialty products. The segment's operating profit was $781 million, with an adjusted operating profit of $815 million, reflecting a 6% increase.
The Prescription Technology Solutions segment reported revenues of $1.2 billion, flat compared to the previous year. The segment's adjusted operating profit remained unchanged at $223 million.
The Medical-Surgical Solutions segment saw a modest 1% increase in revenues to $2.6 billion. However, the segment's adjusted operating profit decreased by 15% to $200 million, impacted by lower volumes and shifts in product demand.
The International segment reported revenues of $3.7 billion, a 6% increase driven by higher pharmaceutical distribution volumes in Canada. The segment's adjusted operating profit rose by 13% to $102 million.
Key Financial Metrics
| Metric | Q1 FY25 | Q1 FY24 | Change |
|---|---|---|---|
| Revenues | $79.3 billion | $74.5 billion | 6% |
| Net Income | $915 million | $958 million | (4%) |
| Adjusted EPS | $7.88 | $7.27 | 8% |
Cash Flow and Capital Allocation
During the first three months of the fiscal year, McKesson returned $609 million to shareholders, including $527 million in stock repurchases and $82 million in dividend payments. The company used $1.4 billion in cash from operations, a portion of which supported onboarding new customers, and invested $167 million in capital expenditures, resulting in a negative free cash flow of $1.5 billion.
Outlook and Strategic Priorities
McKesson raised its fiscal 2025 adjusted EPS guidance range to $31.75 to $32.55, indicating a 16% to 19% growth compared to the prior year. The company remains confident in its strategy and ability to deliver on its raised guidance and long-term objectives.
We continue to advance our strategic priorities leveraging our broad capabilities across the enterprise. Strong momentum continues across our U.S. Pharmaceutical segment, particularly within our broad Oncology offerings," said Brian Tyler.
For more detailed insights and the complete earnings report, visit McKesson Corp's 8-K filing.
Explore the complete 8-K earnings release (here) from McKesson Corp for further details.
