McKesson Corporation (MCK Quick QuoteMCK - Free Report) reported second-quarter fiscal 2027 adjusted earnings per share (EPS) of $11.68, up 18% year over year. The figure surpassed the Zacks Consensus Estimate of $10.69 by 9.3%, driven by strong operational growth in North American Pharmaceutical, Oncology & Multispecialty and Prescription Technology Solutions, alongside a lower share count.

GAAP EPS increased 17% to $10.44 from $8.92 in the year-ago quarter.

Revenue Details

Revenues increased 8% year over year to $110.96 billion, beating the consensus estimate by 0.8%. Growth reflected higher prescription volumes and demand for specialty distribution. GLP-1 medication distribution revenues reached $16 billion, increasing 26% year over year.

The top line benefited from higher specialty product volumes across health systems and strategic accounts, along with continued growth in provider solutions. These gains were partially offset by lower contributions from branded pharmaceuticals and branded-to-generic conversions.

Lower branded pharmaceutical pricing following wholesale acquisition cost reductions in January 2026 reduced North American Pharmaceutical revenue growth by approximately 4%. However, these pricing changes did not meaningfully affect segmental operating profit.

McKesson Corporation Price, Consensus and EPS Surprise

McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote

McKesson's Q2 Segmental Analysis

McKesson reports under four segments — North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions and Medical-Surgical Solutions.

North American Pharmaceutical revenues increased 6% year over year to $91.36 billion. Adjusted segment operating profit climbed 22% to $1.04 billion, supported by specialty distribution growth and higher prescription transaction volumes.

Oncology & Multispecialty revenues surged 24% to $14.98 billion, reflecting strength in provider solutions and specialty distribution. Adjusted operating profit increased 8% to $427 million. Excluding $51 million in prior-year gains related to the U.S. Oncology Network, profit grew 23%.

Prescription Technology Solutions revenues rose 10% to $1.52 billion, driven by higher prescription volumes in third-party logistics and access solutions. Adjusted operating profit advanced 18% to $307 million, reflecting increased demand for access services, including prior authorization solutions.

Medical-Surgical Solutions revenues increased 5% to $3.10 billion, supported by extended and ambulatory care channels. However, adjusted operating profit declined 10% to $225 million due to unfavorable product mix in ambulatory care, partly offset by extended care growth.

MCK's Margin and Expense Trends

Adjusted gross profit increased 10% year over year to $3.90 billion, reflecting growth across the company's major operating businesses. The adjusted gross margin expanded approximately 9 basis points to 3.52%. Adjusted operating expenses rose 8% to $2.11 billion, primarily reflecting investments supporting business expansion.

Adjusted operating profit climbed 13% to $1.85 billion. The adjusted operating margin improved roughly 9 basis points to 1.61%, demonstrating operating leverage despite continued investments in technology and distribution infrastructure.

Diluted weighted-average shares outstanding declined 6% to 116.7 million, reflecting ongoing share repurchases.

McKesson's Financial Update

McKesson ended the second quarter of fiscal 2027 with $6.53 billion in cash and cash equivalents, up from $5.16 billion at the end of the first quarter. Total liquidity was approximately $11.5 billion.

For the first six months of fiscal 2027, net cash provided by operating activities totaled $2.85 billion compared with $1.5 billion in the year-ago period. Capital expenditures totaled $275 million, resulting in free cash flow of $2.6 billion.

During the first six months of fiscal 2027, shareholder returns totaled $3.6 billion, including $3.4 billion in repurchases and $198 million in dividends.

MCK Raises Fiscal 2027 Guidance

McKesson raised its fiscal 2027 adjusted EPS guidance to $45.60-$46.40 from $44.20-$45.00, indicating year-over-year growth of 17-19%.

The company now expects revenue growth of 6-10%, up from 5-9%, and adjusted operating profit growth of 12-16% compared with its previous projection of 9-13%.

North American Pharmaceutical adjusted operating profit is expected to grow 14-18%, while Oncology & Multispecialty operating profit is projected to increase 18-22%. Prescription Technology Solutions operating profit is anticipated to grow 11-15%. Conversely, operating profit in the Medical-Surgical Solutions segment is projected to range from a 4% decline to no change.

Management anticipates fiscal 2027 free cash flow of $4.5-$4.9 billion and approximately $5 billion in share repurchases.

McKesson's Strategic Portfolio Expansion

McKesson completed its approximately $2.25 billion acquisition of Precision Medicine Group on Nov. 2, expanding clinical research and biopharma commercialization capabilities. Management expects the acquisition to contribute 10-20 cents to adjusted EPS in fiscal 2027.

The company also announced an approximately $1.4 billion investment for a 49% minority interest in Option Care Health, targeting expanded access to specialty infusion therapies. The transaction is expected to be closed during the first half of calendar 2027, subject to customary approvals.

Additionally, McKesson extended its pharmaceutical distribution partnership with CVS Health through June 2032, reinforcing its North American distribution platform.

Our Take

McKesson delivered a strong second-quarter fiscal 2027 performance, with earnings and revenues surpassing estimates on higher specialty distribution volumes, robust prescription demand and improved operating leverage. The upward revision to full-year guidance underscores management's confidence in the company's underlying business momentum.

Despite the earnings and revenue beats and raised guidance, MCK shares declined 1.9% in after-hours trading on Nov. 4. The stock has gained 29.8% year to date compared with the industry's 13.3% growth and the S&P 500 Index's 9.6% increase.

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The decline may reflect investor concerns about the sustainability of strong profit growth in North American Pharmaceutical, particularly as management expects accelerated investments during the second half of fiscal 2027. Normalizing prior authorization volumes under the CMS Medicare GLP-1 Bridge program, continued profitability pressure in Medical-Surgical Solutions and higher financing costs may have added to investor caution.

North American Pharmaceutical remains a major growth engine, benefiting from increasing demand for specialty therapies and GLP-1 medications. Notably, strong operating profit growth despite lower branded pharmaceutical pricing demonstrates the resilience of its distribution model. Continued expansion in oncology provider solutions and growing demand for prescription access services further strengthen the company's growth prospects.

The acquisition of Precision Medicine Group should enhance McKesson's clinical research and biopharma commercialization capabilities, supporting higher-margin growth opportunities. Meanwhile, the proposed investment in Option Care Health could expand its presence in community-based specialty care, subject to transaction closing. The extension of its longstanding CVS Health distribution partnership through June 2032 also reinforces the stability of its core business.

However, profitability pressures in Medical-Surgical Solutions remain a concern, with unfavorable product mix weighing on operating results. Higher financing costs, continued branded pharmaceutical pricing reductions and planned investments in technology and business expansion could also influence near-term performance. Additionally, normalization of prior authorization volumes under the CMS Medicare GLP-1 Bridge program and uncertainty surrounding potential 340B policy changes warrant monitoring.

Zacks Rank and Stocks to Consider

McKesson currently carries a Zacks Rank #3 (Hold).

Some stocks worth considering from the broader medical space are Glaukos (GKOS Quick QuoteGKOS - Free Report) , Becton, Dickinson and Company (BDX Quick QuoteBDX - Free Report) and Globus Medical (GMED Quick QuoteGMED - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Glaukos, currently sporting a Zacks Rank #1, reported third-quarter 2026 earnings per share of 47 cents, which beat the Zacks Consensus Estimate by 491.67%. Revenues of $211 million surpassed the Zacks Consensus Estimate by 24.99%.

Glaukos has an estimated earnings growth rate of 268.8% for 2027. GKOS’ earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 138.6%.

Becton, Dickinson and Company, currently carrying a Zacks Rank #2 (Buy), reported second-quarter 2026 adjusted EPS of $3.23, which beat the Zacks Consensus Estimate by 2.87%. Revenues of $4.98 billion surpassed the Zacks Consensus Estimate by 1.81%.

Becton, Dickinson and Company has an estimated long-term earnings growth rate of 1.1%. BDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 2.94%.

Globus Medical, carrying a Zacks Rank of 2 at present, reported a second-quarter fiscal 2026 adjusted EPS of $1.34, which beat the Zacks Consensus Estimate by 19.6%. Revenues of $790 million missed the Zacks Consensus Estimate by 0.35%.

Globus Medical has an estimated long-term earnings growth rate of 12.4%. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.88%.