Earning Date, Transcript Summary & Report

Record Quarterly Revenue: McKesson reported solid performance in our second quarter, generating record quarterly revenue of $93.7 billion.

Profit and Earnings Growth: Adjusted operating profit increased 7% to $1.3 billion and adjusted earnings per diluted share increased 13% to $7.07.

Strong Cash Flow Generation: We generated strong cash flows in the quarter, allowing us to return more capital to shareholders and to make strategic investments to support the future growth of the business.

Oncology and Biopharma Progress: We are pleased with the continued progress in our differentiated oncology and biopharma services platforms and in the strength of the pharmaceutical distribution business.

Fiscal 2025 Earnings Guidance Update: Our second quarter results improve our outlook for the fully year led us to increase our fiscal 2025 guidance for adjusted earnings per diluted share from the previous range of $31.75 to $32.55 to an updated range of $32.40 to $33.00.

Strong Revenue Growth: Consolidated revenues were $93.7 billion, an increase of 21%, led by strong growth in the US pharmaceutical segment resulting from the onboarding of a new strategic partner and increased prescription volumes, including higher volumes from retail national account customers, specialty products and GLP-1 medications. Adjusting for the addition of a new strategic partner, consolidated revenues increased 8% versus the prior year.

Gross Profit Increase: Gross profit was $3.2 billion, an increase of 7% primarily a result of specialty distribution growth within the US pharmaceutical segment, including our provider solutions business and higher distribution volumes resulting from a new strategic partner. Operating expenses increased 7% to $2 billion, driven by higher expenses to support growth in the US pharmaceutical segment.

Operating Profit Increase: Operating profit was $1.3 billion, an increase of 7% year-over-year results benefited from continued growth in the US pharmaceutical segment and our Canadian and distribution business, partially offset by lower volumes in the medical surgical solutions segment.

Interest Expense Increase: Interest expense was $72 million, an increase over the prior year resulting from higher average balances of our loan portfolio throughout the quarter. The effective tax rate for the quarter was 21%, which was in line with our guidance, driven by the recognition of net discrete tax benefits of $44 million in the quarter.

Medical Surgical Cost Charges: We recorded charges of $227 million in the second quarter of fiscal 2025, including $147 million related to the Medical Surgical Cost Optimization program that we previously announced. We anticipate the costs related to the Medical Surgical segment initiative to be substantially completed by the end of the first half of fiscal 2026 and we anticipate these costs will have a payback period of less than two years.