Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to associated risks and volatility [1] Group 1: Company Overview - McKesson (MCK) is highlighted as a recommended growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 16%, with projected EPS growth of 12.5% this year, surpassing the industry average of 8.2% [4] Group 2: Key Growth Metrics - The asset utilization ratio for McKesson is 4.95, indicating that the company generates $4.95 in sales for every dollar in assets, significantly higher than the industry average of 0.77 [5] - McKesson's sales are expected to grow by 13% this year, compared to the industry average of 3.2% [6] Group 3: Earnings Estimate Revisions - There is a positive trend in earnings estimate revisions for McKesson, with the current-year earnings estimates increasing by 1.7% over the past month [7] Group 4: Investment Positioning - McKesson has achieved a Growth Score of A and a Zacks Rank of 2, positioning it well for potential outperformance in the growth stock category [9]

Company Performance - McKesson (MCK) has returned approximately 26.6% since the beginning of the calendar year, outperforming the Medical sector, which has lost about 4.9% on average [4] - McKesson holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, with the consensus estimate for full-year earnings having increased by 1.4% over the past quarter [3] - McKesson belongs to the Medical - Dental Supplies industry, which includes 14 companies and currently ranks 84 in the Zacks Industry Rank, with this group having lost about 1.9% year-to-date [5] Industry Comparison - The Medical sector consists of 999 individual stocks and currently holds a Zacks Sector Rank of 4, which is based on the average Zacks Rank of the individual stocks within the sector [2] - Another stock in the Medical sector, Adagene Inc. Sponsored ADR (ADAG), has a year-to-date return of 4.8% and also holds a Zacks Rank of 2 (Buy), with its consensus EPS estimate increasing by 7.9% over the past three months [4][5] - The Medical - Biomedical and Genetics industry, which includes Adagene, has 503 stocks and is ranked 75, with this industry having moved -2.9% since the beginning of the year [6]

Core Insights - McKesson (MCK) and Cardinal Health (CAH) are major players in the U.S. healthcare distribution sector, benefiting from consistent demand and long-term industry trends [1][2] - Investors are evaluating which company presents a stronger investment opportunity amid evolving healthcare regulations and inflationary pressures [2] Financial Performance - McKesson reported Q4 fiscal 2025 adjusted EPS of $10.12, exceeding the Zacks Consensus Estimate of $9.81 by 3.2%, with a year-over-year improvement of 63.8% [3] - Cardinal Health reported Q3 fiscal 2025 adjusted EPS of $2.35, surpassing the Zacks Consensus Estimate of $2.15 by 9.3%, with a year-over-year increase of 12.4% [4] Estimates Comparison - The Zacks Consensus Estimate for McKesson's fiscal 2026 sales and EPS indicates a year-over-year improvement of 12.4% and 12.3%, respectively, with EPS estimates improving by 1.4% over the past 60 days [5] - The Zacks Consensus Estimate for Cardinal Health's 2025 sales suggests a year-over-year decline of 1.7%, while EPS is expected to improve by 7.8%, with EPS estimates increasing by 2.3% over the past 30 days [8] Strategic Positioning - McKesson's diversification into higher-margin areas such as oncology and biopharma services supports margin stability and positions the company well for future growth [11] - McKesson's recent earnings report highlighted solid revenue growth, stable margins, and robust free cash flow, alongside consistent shareholder returns through share repurchases and dividend increases [12] - Cardinal Health is focusing on efficiency gains and cost controls while expanding its higher-growth medical segment, which is expected to drive growth [15] - Cardinal Health's first-quarter performance showed strong revenue growth and improving profitability due to effective cost-saving initiatives [16] Price Performance - Year-to-date, McKesson shares have increased by 25.7%, while Cardinal Health shares have surged by 29.2%, driven by rising demand for drug retailing, particularly GLP-1 drugs [17] Investment Outlook - Both companies currently hold a Zacks Rank 3 (Hold), complicating the investment decision [18] - McKesson's style score of 'A' indicates strong growth prospects and attractive valuation, while Cardinal Health's style score of 'C' reflects attractive valuation but lower growth potential [19] - Based on growth estimates and style scores, McKesson is viewed as a better investment choice at present [19]

Group 1: Brokerage Recommendations - McKesson currently has an average brokerage recommendation (ABR) of 1.47, indicating a rating between Strong Buy and Buy, based on recommendations from 17 brokerage firms, with 76.5% (13 out of 17) being Strong Buy [2][5] - Despite the positive ABR, relying solely on this information for investment decisions may not be advisable, as studies show brokerage recommendations often lack success in guiding investors towards stocks with significant price appreciation [5][10] - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10] Group 2: Zacks Rank vs. ABR - The Zacks Rank is a proprietary stock rating tool that classifies stocks into five groups based on earnings estimate revisions, providing a more reliable indicator of near-term price performance compared to ABR [8][11] - Unlike ABR, which is based solely on brokerage recommendations and may not be up-to-date, the Zacks Rank reflects timely changes in earnings estimates, making it a more accurate predictor of future price movements [9][12] - The Zacks Consensus Estimate for McKesson has increased by 2% over the past month to $37.10, indicating growing optimism among analysts regarding the company's earnings prospects [13] Group 3: Investment Outlook for McKesson - The recent change in the consensus estimate, along with other factors, has resulted in a Zacks Rank 2 (Buy) for McKesson, suggesting a favorable investment outlook [14]

McKesson's (MCK) shares have gained 4.4% following its fourth-quarter fiscal 2025 earnings release on May 9. The post-earnings upside reflects growing investor confidence in McKesson's strategic execution and long- term positioning, underpinned by record full-year revenues of $359 billion and a 20% year-over-year increase in adjusted earnings per share (to $33.05). The market's positive response highlights the strength of McKesson's transformation into a more diversified healthcare service provider with a s ...

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Core Viewpoint - McKesson Corporation plans to spin off its Medical-Surgical Solutions segment into an independent company, referred to as NewCo, to enhance shareholder value and focus on strategic growth priorities in its remaining segments [1][2][4]. Deal Overview - The spin-off is part of McKesson's disciplined portfolio management strategy, which has previously included significant divestitures that unlocked shareholder value [2]. - The Medical-Surgical Solutions segment accounts for only 3.2% of McKesson's total revenue, with FY25 revenue around $11.4 billion, and has experienced sluggish growth since 2020 [4][17]. Financial Performance - For FY25, McKesson reported consolidated revenues of $359.1 billion, a 16.2% increase year-over-year from $309.0 billion in FY24 [12]. - In 4Q25, revenues reached $90.8 billion, up 18.9% year-over-year, driven by growth in the U.S. Pharmaceutical segment [10]. - Net income for FY25 was $3.3 billion, a 9.8% increase year-over-year, while adjusted net income was $4.2 billion, up 15.1% [12]. Strategic Focus Post-Spin-Off - After the spin-off, McKesson will concentrate on higher growth and higher margin opportunities in Oncology and Biopharma Solutions [3]. - The company has made recent acquisitions, including Rx Savings Solutions and plans to acquire a controlling stake in Core Ventures, to strengthen its core operations [3]. Long-Term Growth Targets - McKesson reaffirms its long-term adjusted earnings per diluted share growth target of 12% to 14% and updates the U.S. Pharmaceutical segment's long-term adjusted segment operating profit growth target to 6% to 8% [13][14].

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with McKesson (MCK) identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Group 1: Earnings Growth - McKesson has a historical EPS growth rate of 16%, with projected EPS growth of 12% for the current year, significantly outperforming the industry average of 7.5% [5]. Group 2: Asset Utilization - The company boasts an impressive asset utilization ratio of 4.95, indicating it generates $4.95 in sales for every dollar in assets, compared to the industry average of 0.76, showcasing superior efficiency [6]. Group 3: Sales Growth - McKesson's sales are expected to grow by 12% this year, far exceeding the industry average growth rate of 2.1%, highlighting its strong sales performance [7]. Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for McKesson, with the Zacks Consensus Estimate for the current year increasing by 2% over the past month, indicating favorable market sentiment [9]. Group 5: Overall Assessment - McKesson has achieved a Growth Score of A and holds a Zacks Rank of 2, suggesting it is a solid choice for growth investors and a potential outperformer in the market [11].

Group 1 - McKesson Corporation participated in the BofA Securities 2025 Healthcare Conference, with CFO Britt Vitalone discussing the company's fiscal year performance and future guidance [1][2] - The conference provided an opportunity for McKesson to reflect on the past fiscal year and outline expectations for the upcoming year [2] - A significant topic of discussion was the MFN (Most Favored Nation) executive order, which has implications for pricing strategies and business operations [3][4] Group 2 - The CFO highlighted the evolution of McKesson's business model over the past decade, transitioning from fee-for-service to fixed fee-for-service in the brand business [4] - The company has also expanded its focus on USO (United States Oncology) and oncology-related services, which are sensitive to ASP (Average Selling Price) pricing changes [4][5] - The discussion emphasized the potential impact of changes in list prices and ASP-based pricing on McKesson's business operations [4]

Summary of McKesson (MCK) 2025 Conference Call Company Overview - **Company**: McKesson Corporation (MCK) - **Event**: BofA Healthcare Conference - **Date**: May 13, 2025 Key Industry Insights - **MFN Executive Order**: The recent MFN (Most Favored Nation) executive order is a declaration of intent with many details still unclear, including the number of products affected and payment mechanisms involved. The impact on McKesson's business for fiscal 2026 is believed to be limited, as the implementation will take months rather than weeks [3][4][5][7]. - **Community Provider Setting**: McKesson has invested significantly in the community provider setting, which is viewed as the most efficient and cost-effective way to deliver care. The company supports reforms that enhance access and affordability for patients [6][7]. Financial Performance - **2025 Results**: McKesson reported a 15% operating profit growth and a 20% adjusted EPS growth, exceeding long-term targets. The company has consistently focused on oncology and biopharmaceutical services, strengthening its core distribution business [19][20]. Strategic Developments - **MedSurg Separation**: McKesson announced the intent to separate its medical business into an independent company. This move aims to unlock growth potential and value for both the medical business and the remaining McKesson operations [11][12][13][14]. - **Oncology Platform**: The oncology platform has seen significant growth, with over 2,700 providers in the U.S. Oncology Network. The company has added 160 providers in the last year and continues to invest in clinical trial management [25][27]. Market Dynamics - **Generic Market**: The generic marketplace remains competitive but stable. McKesson's sourcing operation, ClarusONE, focuses on providing low-cost products with high availability. Service levels are reported to be at their highest in recent years [30][31][32]. - **Prior Authorization Business**: The prior authorization business is thriving, with a 15% increase in initiations in the fourth quarter. The company supports prior authorization programs for all major GLP-1 products [36][37]. Competitive Landscape - **Oncology Focus**: McKesson has been building its oncology platform since 2010, identifying it as a growth area. The company is also exploring opportunities in other therapeutic areas like retina and ophthalmology [46][48][50]. Capital Deployment Strategy - **M&A vs. Share Repurchases**: McKesson maintains a disciplined approach to capital deployment, prioritizing growth opportunities that align with its strategy. Recent acquisitions, such as Florida Cancer and Prism, exemplify this focus [51][52][53]. Additional Insights - **Drug Demand**: There has been no significant change in drug demand observed in early 2025, aligning with previous guidance. Specialty drugs continue to be the largest growth driver within McKesson's pharmaceutical business [41][43]. - **Regulatory Changes**: Changes in Medicare benefit design for specialty medications may influence script abandonment rates, but no material shifts have been noted in McKesson's data [42][44]. This summary encapsulates the key points discussed during the McKesson conference call, highlighting the company's strategic direction, financial performance, and market dynamics.