Core Viewpoint - McKesson Corporation has completed the acquisition of PRISM Vision Holdings for approximately $850 million, enhancing its presence in the ophthalmology and retinal management sector, which aligns with its strategy to expand specialty healthcare services beyond oncology [1] Expansion of Clinical and Distribution Capabilities - The acquisition enhances McKesson's clinical services and distribution offerings by integrating PRISM's established network, allowing for advanced retinal and ophthalmology management solutions [4] - This integration aims to create a differentiated platform for ophthalmology, reinforcing McKesson's leadership in community-based healthcare solutions [4] Strengthening Data, Analytics, and Research - The deal supports McKesson's long-term goal of expanding its data and analytics capabilities, enabling the optimization of patient outcomes and improvement in clinical research methodologies [5] - Increased investment in innovative clinical research is also facilitated, solidifying McKesson's role in advancing specialty care [6] Deepening Biopharma Partnerships - The acquisition allows McKesson to deepen its relationships with biopharma partners in the ophthalmology space, leveraging PRISM's established reputation to enhance research, distribution, and specialty care capabilities [7] Financial Impact and Growth Projections - The acquisition is expected to be accretive to McKesson's earnings, with PRISM projected to contribute 20-30 cents to adjusted earnings per share in the first 12 months, growing to 65-75 cents per share by the end of the third year [8]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on McKesson (MCK), and highlights the potential misalignment of interests between brokerage firms and retail investors [1][4][9]. Group 1: Brokerage Recommendations for McKesson - McKesson has an average brokerage recommendation (ABR) of 1.38, indicating a consensus between Strong Buy and Buy, based on 16 brokerage firms [2]. - Out of the 16 recommendations, 13 are Strong Buy, accounting for 81.3% of all recommendations [2]. Group 2: Limitations of Brokerage Recommendations - Relying solely on brokerage recommendations may not be advisable, as studies suggest they often fail to guide investors toward stocks with the highest potential for price appreciation [4]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five "Strong Buy" recommendations for every "Strong Sell" [5][9]. - The interests of brokerage firms may not align with those of retail investors, leading to a lack of insight into future stock price movements [6]. Group 3: Zacks Rank as an Alternative - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, classifying stocks into five groups from Strong Buy to Strong Sell [7]. - Unlike the ABR, the Zacks Rank is based on earnings estimate revisions, which have shown a strong correlation with near-term stock price movements [10]. - The Zacks Rank is updated more frequently than the ABR, making it a timely tool for predicting future stock prices [11]. Group 4: Current Earnings Estimates for McKesson - The Zacks Consensus Estimate for McKesson's earnings for the current year remains unchanged at $32.76, indicating steady analyst views on the company's earnings prospects [12]. - The unchanged consensus estimate has resulted in a Zacks Rank of 3 (Hold) for McKesson, suggesting caution despite the Buy-equivalent ABR [13].

Core Viewpoint - McKesson (NYSE: MCK) has shown strong performance in the oncology sector, leading to a significant outperformance of its stock price compared to the market since November 2024 [1]. Group 1 - The company has a robust oncology network that contributes to its superior growth, even in a challenging macroeconomic environment [1]. - The stock has been rated as a 'Strong Buy' due to its performance and growth potential [1].

Economic Sentiment - Investors and consumers are feeling anxious about a potential recession due to an inverted yield curve and a downward revision of GDP growth to -2.8% for Q1 2025 from +4.0% [1][2] Republic Services - Republic Services Inc. (NYSE: RSG) provides essential waste management services, insulating it from declines in consumer spending [4] - The company has shown strong financial performance with a 5.6% year-over-year revenue growth and a 16.4% improvement in net income in the latest quarter [6] - Republic Services has a moderate buy rating with a projected earnings growth of 9.48% and a healthy adjusted free cash flow of nearly $2.2 billion in 2024 [5][6] - The stock has increased nearly 26% in the year ending March 4, and 10 out of 16 analysts have rated it a buy [7] McKesson Corporation - McKesson Corp. (NYSE: MCK) is a major player in the healthcare sector, distributing pharmaceuticals and health supplies, and has seen an 18% year-over-year revenue improvement [9][10] - The company achieved an all-time high stock price in early March after growing more than 20% in the last year, with a projected earnings growth of 11.81% [9][10][12] - McKesson's strategic acquisitions and solid financial footing position it well against potential recession impacts, with 13 out of 15 analysts rating it a buy [11][12] PG&E Corporation - PG&E Corp. (NYSE: PCG) is a key player in the utilities sector, exceeding its goal of 9,000 new-service customer connections for 2024 by over 50% [13][14] - The company reported operating cash flow of $8 billion in 2024, nearly double that of the previous year, and has a projected earnings growth of 9.40% [15] - PG&E's financial position is strong, with its equity needs fully satisfied for a $63 billion capital plan through 2028, despite risks associated with climate change [15]

Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments in complex instruments like cryptocurrencies and CFDs [1]. Group 1 - The website provides general news, personal analysis, and third-party content intended for educational and research purposes [1]. - It explicitly states that the information should not be interpreted as recommendations or advice for any financial actions [1]. - The content is not tailored to individual financial situations or needs, highlighting the necessity for users to perform their own research [1]. Group 2 - The website includes information about high-risk financial instruments, including cryptocurrencies and CFDs, which are complex and can lead to significant financial losses [1]. - Users are encouraged to understand the workings of these instruments and assess their ability to handle the associated risks before investing [1].

Core Insights - McKesson reported an 18% increase in revenues to $95.3 billion and a 16% rise in adjusted operating profit for Q3 FY2025, raising its full-year guidance for adjusted EPS to $32.55-$32.95, indicating a year-over-year growth of 19-20% [1][14] Group 1: Business Segments Performance - The U.S. Pharmaceutical segment significantly contributed to growth, driven by stable utilization trends, increased prescription volumes, and strong specialty pharmaceutical distribution, particularly in oncology, with GLP-1 medications generating $10.9 billion in revenue, a 45% increase year-over-year [2] - The Prescription Technology Solutions segment experienced robust growth, with revenues and operating profit rising 14% and 22%, respectively, due to heightened demand for access and affordability solutions [2][11] - The Medical-Surgical Solutions segment faced a 3% revenue decline due to a weaker-than-expected illness season, but operational efficiencies led to a 4% increase in operating profit [3] Group 2: Strategic Initiatives and Growth Drivers - McKesson is strategically expanding its specialty pharmaceutical distribution and investing in biopharma services, with a focus on oncology and specialty care platforms, including the acquisition of PRISM Vision to enhance its position in ophthalmology [9][12][18] - The company is leveraging digital tools and data analytics to improve prescription adherence and streamline prior authorizations, positioning itself for continued double-digit operating profit growth [11][19] - Operational efficiency remains a priority, with cost optimization initiatives aimed at reducing expenses and enhancing profitability through modernized supply chains and AI-driven analytics [20] Group 3: Financial Outlook and Valuation - McKesson's earnings estimate for FY2025 has improved, with EPS projected at $32.74, reflecting a 19.3% year-over-year growth, and sales estimated at $358.91 billion, indicating over 16% improvement compared to FY2024 [14] - The stock is currently trading at a forward P/E of 16.7X, slightly below the industry average of 17.3X, suggesting a favorable valuation [22] Group 4: Market Position and Competitive Landscape - McKesson has outperformed the Medical-Dental Supplies industry and the broader medical sector over the past six months, although it has underperformed the S&P 500 Index [4] - The company’s strategic focus on high-value specialty care markets positions it well against peers like Cardinal Health and Cencora, which have also shown strong growth [4]

Core Viewpoint - McKesson Corporation reported mixed financial results for the third quarter of fiscal 2025, with adjusted earnings per share (EPS) slightly missing estimates, while revenues showed strong year-over-year growth driven by the Pharmaceutical segment [1][2][15]. Revenue Details - Total revenues reached $95.29 billion, missing the Zacks Consensus Estimate by 0.2%, but reflecting a 17.8% increase year-over-year, primarily due to growth in the Pharmaceutical segment, especially specialty products and GLP-1 medications [2][3]. - The U.S. Pharmaceutical segment generated revenues of $87.1 billion, up 19% year-over-year, driven by increased prescription volumes and growth in the oncology platform [4]. - International segment revenues amounted to $3.9 billion, up 6% year-over-year, attributed to higher pharmaceutical distribution volumes in Canada [5]. Segmental Analysis - The U.S. Pharmaceutical and Specialty Solutions segment reported an adjusted operating profit of $944 million, up 14% from the prior year, due to growth in specialty product distribution [5]. - The Medical-Surgical Solutions segment saw revenues of $2.9 billion, down 3% year-over-year, impacted by lower contributions from illness season vaccines [6]. - The Prescription Technology Solutions segment generated revenues of $1.4 billion, up 14% year-over-year, driven by growth in technology services and third-party logistics [7]. Margins - Gross profit for the quarter was $3.34 billion, up 7% year-over-year, representing 3.5% of net revenues, a decline of nearly 40 basis points year-over-year [9]. - Operating income was reported at $1.22 billion, up 90.7% from the previous year, with an operating margin of 1.3%, an increase of almost 50 basis points year-over-year [9]. Financial Update - Cash and cash equivalents totaled $1.13 billion, down from $2.51 billion a year ago, with cumulative net cash used in operating activities amounting to $1.66 billion compared to a net cash provided of $167 million in the prior year [10]. Fiscal 2025 Guidance - McKesson updated its adjusted EPS guidance for fiscal 2025 to a range of $32.55-$32.95, indicating a growth of 19-20% from the prior year, with revenues expected to grow 16-18% [11][12]. - The U.S. Pharmaceutical segment is projected to achieve 18-20% revenue growth, supported by specialty product distribution and a new strategic partnership contributing $32 billion in revenues [12][17]. Strategic Initiatives - The recent acquisition of PRISM Vision is part of McKesson's strategy to expand into retina and ophthalmology, leveraging expertise in specialty care [18]. - Cost optimization initiatives in the Medical-Surgical segment are expected to enhance efficiencies despite challenges from a weaker flu season [18]. Market Performance - McKesson's shares declined by 3.3% in after-hours trading following the earnings report, with a year-to-date loss of 4.5%, compared to the industry growth of 5.2% and the S&P 500 Index gain of 16.6% [3].

McKesson Corporation Third Quarter Fiscal 2025 Earnings Call February 5, 2025 Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward- looking statements may be identified by their use of terminology such as "believes," "expects," "anticipates," "may," "will," "should," "seeks," "approximately," "intends," "projects," "plans," "estimates," "targets," or the nega ...

Financial Data and Key Metrics Changes - Revenue grew 18% to $95.3 billion and adjusted operating profit grew 16% to $1.5 billion [8][36] - Adjusted earnings per diluted share guidance increased to a range of $32.55 to $32.95, representing 19% to 20% year-over-year growth [9][52] - Gross profit was $3.3 billion, an increase of 7%, with operating expenses rising 2% to $1.9 billion [37][38] Business Line Data and Key Metrics Changes - U.S. Pharmaceutical segment revenues increased 19% to $87.1 billion, driven by higher volumes from retail national account customers and specialty product distribution [41] - Prescription Technology Solutions segment revenues increased 14% to $1.4 billion, with operating profit rising 22% to $235 million [43] - Medical Surgical Solutions revenues decreased 3% to $2.9 billion due to lower demand for illness season products [45] Market Data and Key Metrics Changes - The number of flu-like illness cases was lower than the average of the last five non-COVID years, impacting demand for seasonal vaccines and related products [18][45] - International segment revenues increased 6% to $3.9 billion, with operating profit rising 18% driven by higher pharmaceutical distribution volumes in Canada [48] Company Strategy and Development Direction - The company announced the acquisition of a controlling interest in PRISM Vision to enhance its specialty services platform [7][55] - Focus on strengthening distribution capabilities in North America and expanding oncology and biopharma services platforms [20][30] - Continued investment in automation and technology to modernize distribution networks and improve operational efficiencies [31][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of prescription volumes and growth in specialty areas, particularly oncology [82] - The company anticipates ongoing challenges from public policy and market dynamics but remains focused on long-term growth [70][148] - Cost optimization initiatives are expected to deliver $100 million in savings in the second half of fiscal 2025 [47][60] Other Important Information - The company completed the divestiture of the Rexall and Well.ca businesses to focus on strategic areas [31][61] - Cash and cash equivalents at the end of the quarter were $1.1 billion, with negative free cash flow of $2.6 billion due to timing [50][65] Q&A Session Summary Question: Utilization levels and macro trends impact - Management noted stable prescription volume in the pharma segment, with strong growth in specialty and oncology areas [81] Question: Fiscal 2026 guidance and acquisitions - Management affirmed long-term EPS growth rate of 12% to 14%, with acquisitions subject to regulatory review [87][90] Question: Operating expense growth variability - Management highlighted efforts to drive operating leverage and efficiency while investing in key growth areas [96][97] Question: Medical segment market share and strategy - Management emphasized focus on customer base growth rather than market share, with a shift towards more sophisticated medical products [105][106] Question: PRISM distribution and business impact - Management confirmed they are not the current distributor for PRISM but will pick up that business post-acquisition [108] Question: Cost savings recognition and fiscal 2026 headwinds - Management indicated ongoing cost optimization efforts and potential public policy impacts as headwinds for fiscal 2026 [148]

Core Insights - McKesson reported quarterly earnings of $8.03 per share, slightly missing the Zacks Consensus Estimate of $8.04 per share, but showing an increase from $7.74 per share a year ago, resulting in an earnings surprise of -0.12% [1] - The company posted revenues of $95.29 billion for the quarter ended December 2024, which was below the Zacks Consensus Estimate by 0.18%, and an increase from $80.9 billion year-over-year [2] - McKesson's stock has gained approximately 5.9% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] Earnings Outlook - The future performance of McKesson's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $9.67 on revenues of $90.52 billion, and for the current fiscal year, it is $32.72 on revenues of $358.91 billion [7] Industry Context - The Medical - Dental Supplies industry, to which McKesson belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Becton Dickinson, another company in the same industry, is expected to report quarterly earnings of $2.98 per share, reflecting an 11.2% year-over-year increase, with revenues projected at $5.1 billion, up 8.4% from the previous year [9][10]