Paul Sancya/Pool via Reuters (file)
McKesson raised its fiscal 2027 adjusted earnings outlook Wednesday after quarterly revenue reached $111 billion, up 8%, as prescription volumes and specialty-drug distribution expanded.
The healthcare services company now expects adjusted earnings of $45.60 to $46.40 a share for the year, compared with its previous range of $44.20 to $45.00. The new forecast implies growth of 17% to 19% from the prior fiscal year.
For the second quarter ended September 30, reported diluted earnings were $10.44 a share, up from $8.92 a year earlier. Adjusted earnings, which exclude specified costs and other items, rose 18% to $11.68 a share from $9.86. The adjusted figure is not the same as profit calculated under generally accepted accounting principles.
Specialty distribution drives growth
North American Pharmaceutical, the largest business, generated $91.4 billion in revenue, a 6% increase. Its adjusted operating profit rose 22% to about $1 billion. Higher prescription transaction volumes, including specialty products supplied to health systems and strategic accounts, outweighed lower contributions from branded pharmaceuticals.
Oncology & Multispecialty revenue increased 24% to $15 billion, while adjusted operating profit rose 8% to $427 million. Prescription Technology Solutions revenue grew 10% to $1.5 billion, and adjusted operating profit increased 18% to $307 million.
The gains were not uniform. Medical-Surgical Solutions revenue rose 5% to $3.1 billion, but adjusted operating profit fell 10% to $225 million. McKesson attributed that decline to product mix in ambulatory care, partly offset by growth in extended care.
Cash generation and portfolio changes
McKesson generated $3.1 billion in operating cash flow during the quarter and reported $2.9 billion in free cash flow after capital spending. Across the first six months, it returned $3.6 billion to shareholders, including $3.4 billion in stock repurchases.
The company also extended its pharmaceutical distribution partnership with CVS Health through June 2032 and completed its acquisition of Precision Medicine Group on November 2. Its planned roughly $1.4 billion investment for a 49% stake in Option Care Health remains subject to shareholder and regulatory approvals.
The higher outlook is for adjusted earnings only. McKesson did not provide a GAAP earnings forecast, citing uncertainty around inventory adjustments, litigation, transaction costs and other items. The quarterly results and guidance are detailed in its earnings release.
JBizNews Desk | Irving, Texas
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