McKesson Corporation (MCK Quick QuoteMCK - Free Report) has agreed to sell its Rexall and Well.ca businesses, both based in Canada, to Birch Hill Equity Partners, a Canadian private equity firm. The deal supports McKesson's strategic decision to concentrate on expanding its oncology and biopharma services while maintaining its focus on the Canadian healthcare market through distribution and biopharma. 

Through this transaction, Rexall and Well.ca will benefit from Birch Hill's commitment to investing in growth and expanding services across more locations in Canada. McKesson Canada will continue to provide wholesale distribution support to both businesses.

Shares of MCK closed 9.9% lower on Sept. 5 following the news.

Significance of Rexall and Well.ca Sale for MCK

The sale is in line with McKesson’s broader strategy to streamline operations and prioritize investments in high-growth areas such as oncology and biopharma services. By divesting Rexall and Well.ca, McKesson will free up resources to bolster these core sectors while continuing to support Canadian healthcare needs through its distribution channels.

More on the Sale

Birch Hill Equity Partners, a Canadian private equity firm with over 30 years of experience, will invest in expanding Rexall and Well.ca to enhance their services across more locations in Canada. McKesson Canada plans to remain their wholesale distribution supplier.

McKesson Canada will own and operate Rexall and Well.ca until the transaction is finalized, pending regulatory clearances and customary closing conditions.

Market Prospects Favoring MCK

Per a report in Research and Markets, the healthcare services market is estimated to be worth $8.96 trillion in 2024. It is anticipated to reach $10.91 trillion by 2028 at a CAGR of 5%.

The robust growth is likely to be driven by the expansion of telehealth and digital health services, efforts to address healthcare workforce shortages, advancement of health equity initiatives and the adoption of value-based care models. Additionally, shifts in reimbursement mechanisms, increased integration of telemedicine, a stronger focus on patient-centered and preventive care, the advancement of personalized medicine and ongoing healthcare consolidation are major trends expected to shape the market.

MCK Stock Price Performance

Shares of McKesson have risen 11.2% year to date compared with the industry’s 2.5% growth. The S&P 500 has witnessed a 15.7% rise in the same time frame.

Image Source: Zacks Investment Research

Zacks Rank & Key Picks

Currently, McKesson carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the broader medical space are Universal Health Services (UHS Quick QuoteUHS - Free Report) , ABM Industries (ABM Quick QuoteABM - Free Report) and Quest Diagnostics (DGX Quick QuoteDGX - Free Report) . While Universal Health Services sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Universal Health Services has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.

Universal Health Services has gained 41.1% compared with the industry's 34.8% growth year to date.

Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.

Quest Diagnostics shares have risen 3.7% year to date compared with the industry’s 10.2% growth.

ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.

ABM's shares have risen 24.1% year to date compared with the industry’s 11.9% growth.