Core Insights - High dividend yields are attractive, but total return, which includes both dividend yield and share price change, is a more relevant measure of stock performance [1] - Five stocks are highlighted for their strong total returns and significant dividend increases of 10% or more in 2025 [2] Company Summaries Comfort Systems USA (FIX) - Announced a 10% increase in its quarterly dividend to $0.50, payable on Aug. 25 [2] - Current dividend yield is 0.26%, with a payout ratio of 9.25% and a 13-year track record of dividend payments [2] - Despite a low yield, the stock has risen over 600% since early 2022, reflecting strong earnings momentum and investor confidence [4] Wingstop (WING) - Achieved a total return of nearly 28% in 2025, with an 11% increase in its quarterly dividend to $1.08 [6] - Current dividend yield is 0.32%, with a payout ratio of 18% and a 7-year track record of dividend payments [5] - The stock's quarterly payout has grown at a compound annual growth rate of over 16% in the past three years [7] McKesson (MCK) - Recently increased its quarterly dividend by 15% to $0.82, payable on Oct. 1 [9] - Current dividend yield is 0.40%, with a payout ratio of 10.99% and a 17-year track record of dividend payments [9] - The stock has provided a total return of around 23% in 2025, with consistent dividend increases enhancing long-term value [11] Encompass Health (EHC) - Announced a nearly 12% increase in its quarterly dividend to $0.19, payable on Oct. 15 [12] - Current dividend yield is 0.58%, with a payout ratio of 14.05% and a 2-year track record of dividend payments [12] - The company has achieved a total return of over 18% in 2025, indicating a focus on long-term capital returns [13] Welltower (WELL) - Increased its quarterly dividend by 10.4% to $0.74, payable on Aug. 21 [15] - Current dividend yield is 1.59%, with a payout ratio of 151.41% and a 2-year track record of dividend payments [14] - The stock has achieved a total return of over 33% in 2025, reflecting improving fundamentals and consistent dividend growth [16] Overall Market Trends - The five highlighted stocks are increasing their dividends, which is crucial as they have experienced significant share price appreciation [18] - Dividend increases help mitigate the decline in yield due to rising share prices, enhancing the overall return profile for investors [18]

[Fiscal 2026 First Quarter Results Overview](index=1&type=section&id=Fiscal%202026%20First%20Quarter%20Results%20Overview) McKesson Corporation reported a strong first quarter for fiscal year 2026, with record revenue of $97.8 billion, a 23% increase year-over-year, and raised its full-year Adjusted EPS guidance [First Quarter Highlights](index=1&type=section&id=First%20Quarter%20Highlights) McKesson Corporation reported a strong first quarter for fiscal year 2026, with record revenue of **$97.8 billion**, a **23% increase** year-over-year, and raised its full-year Adjusted EPS guidance First Quarter Financial Performance | Metric | FY26 Q1 ($ millions, except per share) | FY25 Q1 ($ millions, except per share) | Change (%) | | :------------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | | Revenues | $97,827 | $79,283 | 23 | | Net income attributable to McKesson | $784 | $915 | (14) | | Adjusted Earnings | $1,037 | $1,029 | 1 | | Earnings per diluted common share | $6.25 | $7.00 | (11) | | Adjusted Earnings per Diluted Share | $8.26 | $7.88 | 5 | - Consolidated revenues increased **23% to $97.8 billion**[6](index=6&type=chunk) - Adjusted Earnings per Diluted Share increased **5% to $8.26**[6](index=6&type=chunk) - Completed acquisitions of controlling interests in PRISM Vision Holdings, LLC and Core Ventures[6](index=6&type=chunk) - Board of Directors approved a **15% increase** to the quarterly dividend, marking the ninth consecutive year of increases[6](index=6&type=chunk) - Raised Fiscal 2026 Adjusted Earnings per Diluted Share guidance range to **$37.10 to $37.90**, from $36.90 to $37.70[6](index=6&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Brian Tyler highlighted a standout quarter with enterprise-wide momentum and growth, attributing strong results to strategic execution and employee dedication, leading to increased full-year Adjusted EPS guidance - CEO Brian Tyler stated, "McKesson had a standout quarter with momentum and growth across the enterprise"[4](index=4&type=chunk) - Record revenue of **$97.8 billion**, representing **23% growth** compared to the previous year[4](index=4&type=chunk) - Closed acquisitions of PRISM Vision Holdings and Core Ventures, expanding capabilities in Oncology and Specialty solutions[4](index=4&type=chunk) - Raised fiscal 2026 Adjusted Earnings per Diluted Share guidance to a range of **$37.10 to $37.90**[4](index=4&type=chunk) [Detailed Financial Performance (Q1 FY26)](index=3&type=section&id=Detailed%20Financial%20Performance%20(Q1%20FY26)) First quarter revenues rose significantly, driven by U.S. Pharmaceutical growth, while GAAP EPS decreased due to a Rite Aid bad debt provision, offset by a 5% Adjusted EPS increase and negative Free Cash Flow from acquisitions - First quarter revenues were **$97.8 billion**, an increase of **23%** from a year ago, primarily driven by growth in the U.S. Pharmaceutical segment due to increased prescription volumes and growth in oncology and specialty products, including contributions from acquisitions[7](index=7&type=chunk) - First quarter earnings per diluted share was **$6.25**, a decrease of **$0.75**, due to a pre-tax increase to the provision for bad debts of **$189 million** within the U.S. Pharmaceutical segment related to the Rite Aid bankruptcy[8](index=8&type=chunk) - First quarter Adjusted Earnings per Diluted Share was **$8.26**, an increase of **5%**, driven by strong operational growth across the business, partially offset by a higher tax rate and pre-tax gains in the prior year[9](index=9&type=chunk) Cash Flow Summary | Cash Flow Item (Three Months Ended June 30, 2025) | Amount ($ millions) | | :------------------------------------------------ | :------------------ | | Cash returned to shareholders | $671 | | Common stock repurchases | $581 | | Dividend payments | $90 | | Cash used from operations | $918 | | Capital expenditures | $189 | | Free Cash Flow | $(1,100) | | Cash used towards acquisitions | $3,400 | [Business Highlights & Strategic Developments](index=3&type=section&id=Business%20Highlights%20%26%20Strategic%20Developments) McKesson completed two significant acquisitions, expanded its presence in ophthalmology and oncology, increased its quarterly dividend by 15%, and agreed to sell its Norwegian retail and distribution businesses [Corporate Strategic Developments](index=3&type=section&id=Corporate%20Strategic%20Developments) McKesson completed two significant acquisitions, expanded its presence in ophthalmology and oncology, increased its quarterly dividend by 15%, and agreed to sell its Norwegian retail and distribution businesses - Completed the acquisition of an **80% controlling interest** in PRISM Vision Holdings, LLC on April 1, 2025, a leading provider in general ophthalmology and retina management services[14](index=14&type=chunk) - Completed the acquisition of a **70% controlling interest** in Core Ventures on June 2, 2025, a business and administrative services organization established by Florida Cancer Specialists & Research Institute, LLC (FCS), growing its total number of providers to approximately **3,300**[14](index=14&type=chunk) - Board of Directors declared a **15% increase** to its quarterly dividend from **$0.71 per share to $0.82 per share**, marking the ninth consecutive year of increases[14](index=14&type=chunk) - Entered into a definitive agreement on August 4, 2025, to sell its retail and distribution businesses in Norway to NorgesGruppen, subject to customary closing conditions[14](index=14&type=chunk) [U.S. Pharmaceutical Segment Performance](index=3&type=section&id=U.S.%20Pharmaceutical%20Segment%20Performance) The U.S. Pharmaceutical segment reported a **25% revenue increase**, driven by higher prescription volumes and growth in oncology and specialty products, with Adjusted Segment Operating Profit up **17%** U.S. Pharmaceutical Segment Financials | Metric | FY26 Q1 ($ millions) | FY25 Q1 ($ millions) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | | Revenues | $90,000 | $71,715 | 25 | | Segment Operating Profit | $727 | $781 | (7) | | Adjusted Segment Operating Profit | $950 | $815 | 17 | - Revenue growth was driven by increased prescription volumes from retail national account customers and growth in the distribution of oncology and specialty products, including contributions from acquisitions[14](index=14&type=chunk) - Adjusted Segment Operating Profit increase was driven by growth in core pharmaceutical distribution, including higher volumes from retail national account customers, and growth in the distribution of oncology and specialty products, including contributions from acquisitions[14](index=14&type=chunk) [Prescription Technology Solutions Segment Performance](index=3&type=section&id=Prescription%20Technology%20Solutions%20Segment%20Performance) The Prescription Technology Solutions segment saw a **16% revenue increase** from higher prescription volumes in logistics and technology services, with Adjusted Segment Operating Profit growing **21%** due to increased demand for access solutions Prescription Technology Solutions Segment Financials | Metric | FY26 Q1 ($ millions) | FY25 Q1 ($ millions) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | | Revenues | $1,400 | $1,241 | 16 | | Segment Operating Profit | $253 | $203 | 25 | | Adjusted Segment Operating Profit | $269 | $223 | 21 | - Revenue increase was driven by increased prescription volumes in the third-party logistics and technology services businesses[14](index=14&type=chunk) - Adjusted Segment Operating Profit increase was driven by higher demand for access solutions[14](index=14&type=chunk) [Medical-Surgical Solutions Segment Performance](index=5&type=section&id=Medical-Surgical%20Solutions%20Segment%20Performance) The Medical-Surgical Solutions segment's revenues increased by **2%** due to higher specialty pharmaceutical volumes, while Adjusted Segment Operating Profit grew **22%** from cost optimization efficiencies Medical-Surgical Solutions Segment Financials | Metric | FY26 Q1 ($ millions) | FY25 Q1 ($ millions) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | | Revenues | $2,700 | $2,636 | 2 | | Segment Operating Profit | $221 | $188 | 18 | | Adjusted Segment Operating Profit | $244 | $200 | 22 | - Revenue increase was driven by higher volumes of specialty pharmaceuticals[22](index=22&type=chunk) - Adjusted Segment Operating Profit increase was led by operational efficiencies from cost optimization initiatives[22](index=22&type=chunk) [International Segment Performance](index=5&type=section&id=International%20Segment%20Performance) The International segment's revenues rose **1%** from higher Canadian pharmaceutical distribution volumes, partially offset by divestitures, leading to a **3% decrease** in Adjusted Segment Operating Profit International Segment Financials | Metric | FY26 Q1 ($ millions) | FY25 Q1 ($ millions) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | | Revenues | $3,700 | $3,691 | 1 | | Segment Operating Profit | $92 | $90 | 2 | | Adjusted Segment Operating Profit | $99 | $102 | (3) | - Revenue increase was driven by higher pharmaceutical distribution volumes in the Canadian business, partially offset by the divestiture of the Canada-based Rexall and Well.ca retail businesses[22](index=22&type=chunk) - Adjusted Segment Operating Profit decrease was a result of the fiscal 2025 divestiture of the Canada-based Rexall and Well.ca retail businesses, partially offset by higher pharmaceutical distribution volumes in the Canadian business[22](index=22&type=chunk) [Fiscal 2026 Outlook](index=5&type=section&id=Fiscal%202026%20Outlook) McKesson raised its fiscal 2026 Adjusted Earnings per Diluted Share guidance to **$37.10-$37.90**, including a **$0.20 accretion** from the anticipated sale of its Norwegian businesses [Fiscal 2026 Outlook](index=5&type=section&id=Fiscal%202026%20Outlook) McKesson raised its fiscal 2026 Adjusted Earnings per Diluted Share guidance to **$37.10-$37.90**, including a **$0.20 accretion** from the anticipated sale of its Norwegian businesses - McKesson is raising its fiscal 2026 Adjusted Earnings per Diluted Share guidance to **$37.10 to $37.90** from the previous range of $36.90 to $37.70[17](index=17&type=chunk) - The updated guidance range includes approximately **$0.20** of Adjusted Earnings per Diluted Share accretion as a result of the anticipated held-for-sale accounting related to the agreement to sell its retail and distribution businesses in Norway[17](index=17&type=chunk) - The company does not provide forward-looking guidance on a GAAP basis due to the difficulty in forecasting certain unpredictable adjustments[16](index=16&type=chunk) [Corporate Information](index=5&type=section&id=Corporate%20Information) This section provides details on McKesson's upcoming investor events, an overview of the company's mission, and important cautionary statements regarding forward-looking information [Conference Call & Investor Day](index=5&type=section&id=Conference%20Call%20%26%20Investor%20Day) McKesson scheduled a conference call for August 6, 2025, to discuss financial results and will host an Investor Day on September 23, 2025, featuring presentations from its leadership team - Conference call scheduled for August 6, 2025, at 4:30 PM ET to discuss financial results, with an audio webcast available on investor.mckesson.com[19](index=19&type=chunk) - McKesson will host its Investor Day on Tuesday, September 23, 2025, featuring presentations by the leadership team and a live Q&A session[20](index=20&type=chunk) [About McKesson Corporation](index=7&type=section&id=About%20McKesson%20Corporation) McKesson Corporation is a diversified healthcare services leader dedicated to improving patient health outcomes by partnering with various entities to deliver insights, products, and services - McKesson Corporation is a diversified healthcare services leader dedicated to advancing health outcomes for patients everywhere[25](index=25&type=chunk) - Teams partner with biopharma companies, care providers, pharmacies, manufacturers, governments, and others to deliver insights, products, and services[25](index=25&type=chunk) - Routinely uses its website, investors.mckesson.com, to post material information for investors[26](index=26&type=chunk) [Cautionary Statements](index=7&type=section&id=Cautionary%20Statements) This section contains forward-looking statements, advising readers that actual results may differ materially due to various risks and uncertainties, and encourages review of SEC filings - The earnings release contains forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from projections[23](index=23&type=chunk) - Readers should not place undue reliance on forward-looking statements, which speak only as of the date they are first made[23](index=23&type=chunk) - Key risk factors include costly legal disputes (e.g., opioids), cybersecurity incidents, inability to achieve strategic growth objectives, impacts from healthcare reform, and changes in economic environments[24](index=24&type=chunk) [Financial Statements (GAAP)](index=9&type=section&id=Financial%20Statements%20(GAAP)) This section presents McKesson's GAAP financial statements, including condensed consolidated statements of operations, balance sheets, and cash flows, providing a comprehensive view of the company's financial position and performance [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The GAAP Condensed Consolidated Statements of Operations show McKesson's financial performance for Q1 FY26, with significant revenue growth but a decrease in net income attributable to McKesson Corporation Condensed Consolidated Statements of Operations | Metric (Three Months Ended June 30) | 2025 ($ millions, except per share) | 2024 ($ millions, except per share) | Change (%) | | :---------------------------------- | :---------------------------------- | :---------------------------------- | :--------- | | Revenues | $97,827 | $79,283 | 23 | | Gross profit | $3,279 | $3,152 | 4 | | Operating income | $1,036 | $1,029 | 1 | | Income before income taxes | $1,051 | $1,084 | (3) | | Net income | $831 | $960 | (13) | | Net income attributable to McKesson | $784 | $915 | (14) | | Diluted EPS | $6.25 | $7.00 | (11) | | Dividends declared per common share | $0.71 | $0.62 | 15 | [Condensed Consolidated Balance Sheets](index=13&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets as of June 30, 2025, show increased total assets, driven by receivables, inventories, goodwill, and intangibles, with a corresponding rise in total liabilities, particularly debt Condensed Consolidated Balance Sheets | Balance Sheet Item | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | | :----------------- | :------------------------- | :-------------------------- | | Total current assets | $56,801 | $55,398 | | Total assets | $81,311 | $75,140 | | Total current liabilities | $64,331 | $61,604 | | Long-term debt | $6,528 | $4,463 | | Total liabilities, redeemable noncontrolling interests, and deficit | $81,311 | $75,140 | - Cash and cash equivalents decreased from **$5,691 million to $2,418 million**[40](index=40&type=chunk) - Goodwill increased from **$10,022 million to $11,365 million**, and intangible assets, net, increased from **$1,464 million to $4,272 million**, likely due to recent acquisitions[40](index=40&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows reveal a significant net decrease in cash for Q1 FY26, primarily due to substantial cash used in operating and investing activities, especially for acquisitions Condensed Consolidated Statements of Cash Flows | Cash Flow Category (Three Months Ended June 30) | 2025 ($ millions) | 2024 ($ millions) | | :---------------------------------------------- | :---------------- | :---------------- | | Net cash used in operating activities | $(918) | $(1,380) | | Net cash used in investing activities | $(3,564) | $(87) | | Net cash provided by (used in) financing activities | $1,176 | $(809) | | Net decrease in cash, cash equivalents, and restricted cash | $(3,273) | $(2,281) | | Cash and cash equivalents at end of period | $2,418 | $2,302 | - Payments for acquisitions, net of cash, cash equivalents, and restricted cash acquired, amounted to **$3,359 million** in Q1 FY26, compared to zero in Q1 FY25[42](index=42&type=chunk) - Proceeds from issuances of long-term debt were **$1,990 million** in Q1 FY26[42](index=42&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section provides detailed reconciliations of GAAP to Non-GAAP financial measures, offering supplemental insights into McKesson's operating performance and the definitions of these adjusted metrics [Reconciliation of GAAP Operating Results to Adjusted Results (EPS)](index=10&type=section&id=Reconciliation%20of%20GAAP%20Operating%20Results%20to%20Adjusted%20Results%20(EPS)) This section reconciles GAAP Net Income and EPS to Adjusted Earnings and Adjusted EPS, detailing pre-tax and after-tax adjustments that significantly impact the adjusted financial figures Reconciliation of GAAP to Adjusted EPS | Metric (Three Months Ended June 30) | 2025 ($ millions, except per share) | 2024 ($ millions, except per share) | Change (%) | | :---------------------------------- | :---------------------------------- | :---------------------------------- | :--------- | | Net income attributable to McKesson (GAAP) | $784 | $915 | (14) | | Pre-tax adjustments: | | | | | Amortization of acquisition-related intangibles | $50 | $63 | (21) | | Transaction-related expenses and adjustments | $86 | $15 | 473 | | Other adjustments, net | $161 | $43 | 274 | | Adjusted Earnings (Non-GAAP) | $1,037 | $1,029 | 1 | | Earnings per diluted common share (GAAP) | $6.25 | $7.00 | (11) | | Adjusted Earnings per Diluted Share (Non-GAAP) | $8.26 | $7.88 | 5 | [Reconciliation of GAAP Operating Results to Adjusted Results (Income Statement Items)](index=11&type=section&id=Reconciliation%20of%20GAAP%20Operating%20Results%20to%20Adjusted%20Results%20(Income%20Statement%20Items)) This reconciliation details adjustments to GAAP income statement items like Gross Profit, Operating Expenses, and Income Tax Expense, providing a clearer view of core operational performance by excluding non-recurring items Reconciliation of GAAP to Adjusted Income Statement Items | Metric (Three Months Ended June 30) | 2025 ($ millions) | 2024 ($ millions) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | | Gross profit (GAAP) | $3,279 | $3,152 | 4 | | Adjusted Gross Profit (Non-GAAP) | $3,264 | $3,060 | 7 | | Total operating expenses (GAAP) | $(2,243) | $(2,123) | 6 | | Adjusted Operating Expenses (Non-GAAP) | $(1,904) | $(1,927) | (1) | | Other income, net (GAAP) | $64 | $130 | (51) | | Adjusted Other Income (Non-GAAP) | $64 | $172 | (63) | | Interest expense (GAAP) | $(49) | $(75) | (35) | | Adjusted Interest Expense (Non-GAAP) | $(44) | $(70) | (37) | | Income tax expense (GAAP) | $(220) | $(124) | 77 | | Adjusted Income Tax Expense (Non-GAAP) | $(295) | $(160) | 84 | [Reconciliation of GAAP Segment Operating Results to Adjusted Results](index=12&type=section&id=Reconciliation%20of%20GAAP%20Segment%20Operating%20Results%20to%20Adjusted%20Results) This section reconciles GAAP segment operating profit to Adjusted Segment Operating Profit for each business segment, highlighting the impact of adjustments on profitability and underlying operational performance Adjusted Segment Operating Profit | Segment Operating Profit (Three Months Ended June 30) | 2025 GAAP ($ millions) | 2025 Adjusted ($ millions) | 2024 GAAP ($ millions) | 2024 Adjusted ($ millions) | 2025 vs 2024 Adjusted Change (%) | | :---------------------------------------------------- | :--------------------- | :------------------------- | :--------------------- | :------------------------- | :------------------------------- | | U.S. Pharmaceutical | $727 | $950 | $781 | $815 | 17 | | Prescription Technology Solutions | $253 | $269 | $203 | $223 | 21 | | Medical-Surgical Solutions | $221 | $244 | $188 | $200 | 22 | | International | $92 | $99 | $90 | $102 | (3) | | Subtotal | $1,293 | $1,562 | $1,262 | $1,340 | 17 | | Corporate expenses, net | $(193) | $(138) | $(103) | $(35) | 294 | | Income before interest expense and income taxes | $1,100 | $1,424 | $1,159 | $1,305 | 9 | Adjusted Segment Operating Profit as % of Revenues | Segment Operating Profit as % of Revenues (Three Months Ended June 30) | 2025 GAAP (%) | 2025 Adjusted (%) | 2024 GAAP (%) | 2024 Adjusted (%) | 2025 vs 2024 Adjusted Change (bp) | | :--------------------------------------------------------------------- | :------------ | :---------------- | :------------ | :---------------- | :-------------------------------- | | U.S. Pharmaceutical | 0.81 | 1.06 | 1.09 | 1.14 | (8) | | Prescription Technology Solutions | 17.64 | 18.76 | 16.36 | 17.97 | 79 | | Medical-Surgical Solutions | 8.18 | 9.03 | 7.13 | 7.59 | 144 | | International | 2.46 | 2.65 | 2.44 | 2.76 | (11) | [Reconciliation of GAAP Cash Flow to Free Cash Flow](index=15&type=section&id=Reconciliation%20of%20GAAP%20Cash%20Flow%20to%20Free%20Cash%20Flow) This section reconciles GAAP net cash used in operating activities to Free Cash Flow, showing negative Free Cash Flow for Q1 FY26 primarily due to significant cash used in operations and capital expenditures Reconciliation of GAAP Cash Flow to Free Cash Flow | Cash Flow Category (Three Months Ended June 30) | 2025 ($ millions) | 2024 ($ millions) | Change (%) | | :---------------------------------------------- | :---------------- | :---------------- | :--------- | | Net cash used in operating activities (GAAP) | $(918) | $(1,380) | (33) | | Payments for property, plant, and equipment | $(111) | $(106) | 5 | | Capitalized software expenditures | $(78) | $(61) | 28 | | Free Cash Flow (Non-GAAP) | $(1,107) | $(1,547) | (28) | [Financial Statement Notes](index=16&type=section&id=Financial%20Statement%20Notes) The financial statement notes explain specific adjustments, including restructuring charges, claims and litigation, and other items like the bad debt provision related to the Rite Aid bankruptcy - Restructuring, impairment, and related charges for Q1 FY26 included **$47 million** pre-tax, primarily within Medical-Surgical Solutions and Corporate Expenses[47](index=47&type=chunk) - Claims and litigation charges for Q1 FY25 included **$114 million** pre-tax related to estimated liability for opioid-related claims[47](index=47&type=chunk) - Other adjustments for Q1 FY26 included a pre-tax provision for bad debts of **$189 million** within U.S. Pharmaceutical related to the Rite Aid bankruptcy, which is excluded from adjusted results as it's not reflective of normal business operations[47](index=47&type=chunk) [Supplemental Non-GAAP Financial Information Definitions](index=17&type=section&id=Supplemental%20Non-GAAP%20Financial%20Information%20Definitions) This section defines various Non-GAAP financial measures used by McKesson, providing additional insights into operating performance and facilitating comparisons, while noting they are not GAAP substitutes - Non-GAAP measures are provided to offer useful supplemental information regarding operating performance and assist with comparisons of financial results[60](index=60&type=chunk) - Management internally uses both GAAP and Non-GAAP financial measures for financial planning, resource allocation, capital deployment, performance assessment, and incentive compensation[61](index=61&type=chunk) - Non-GAAP adjusted results should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP[61](index=61&type=chunk) [Adjusted Gross Profit (Non-GAAP)](index=17&type=section&id=Adjusted%20Gross%20Profit%20(Non-GAAP)) Adjusted Gross Profit is defined as GAAP gross profit, excluding specific transaction-related expenses, LIFO adjustments, antitrust settlement gains, and other adjustments - Defined as GAAP gross profit, excluding transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, and other adjustments[49](index=49&type=chunk) [Adjusted Operating Expenses (Non-GAAP)](index=17&type=section&id=Adjusted%20Operating%20Expenses%20(Non-GAAP)) Adjusted Operating Expenses are defined as GAAP total operating expenses, excluding amortization of acquisition-related intangibles, transaction expenses, restructuring, and litigation charges - Defined as GAAP total operating expenses, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, restructuring, impairment, and related charges, claims and litigation charges, and other adjustments[49](index=49&type=chunk) [Adjusted Other Income (Non-GAAP)](index=17&type=section&id=Adjusted%20Other%20Income%20(Non-GAAP)) Adjusted Other Income is defined as GAAP other income, net, excluding amortization of acquisition-related intangibles, transaction-related expenses, and other specific adjustments - Defined as GAAP other income (expense), net, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, and other adjustments[49](index=49&type=chunk) [Adjusted Interest Expense (Non-GAAP)](index=17&type=section&id=Adjusted%20Interest%20Expense%20(Non-GAAP)) Adjusted Interest Expense is defined as GAAP interest expense, excluding transaction-related adjustments specifically for net interest expense from cross-currency swaps - Defined as GAAP interest expense, excluding transaction-related expenses and adjustments related to net interest expense incurred from cross-currency swaps[49](index=49&type=chunk) [Adjusted Income Tax Expense (Non-GAAP)](index=17&type=section&id=Adjusted%20Income%20Tax%20Expense%20(Non-GAAP)) Adjusted Income Tax Expense is defined as GAAP income tax benefit (expense), excluding the tax effects of various adjustments like amortization of intangibles and transaction-related expenses - Defined as GAAP income tax benefit (expense), excluding the income tax effects of various adjustments such as amortization of acquisition-related intangibles, transaction-related expenses, LIFO adjustments, and claims and litigation charges[49](index=49&type=chunk) [Adjusted Earnings (Non-GAAP)](index=17&type=section&id=Adjusted%20Earnings%20(Non-GAAP)) Adjusted Earnings are defined as GAAP income attributable to McKesson, excluding various non-recurring or non-operational items and their related income tax effects - Defined as GAAP income attributable to McKesson, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, claims and litigation charges, other adjustments, as well as the related income tax effects for each of these items[49](index=49&type=chunk) [Adjusted Earnings per Diluted Share (Non-GAAP)](index=17&type=section&id=Adjusted%20Earnings%20per%20Diluted%20Share%20(Non-GAAP)) Adjusted Earnings per Diluted Share is defined as GAAP earnings per diluted common share, excluding per share impacts of various adjustments, divided by diluted weighted-average shares outstanding - Defined as GAAP earnings per diluted common share attributable to McKesson, excluding per share impacts of various adjustments such as amortization of acquisition-related intangibles, transaction-related expenses, LIFO adjustments, and claims and litigation charges, divided by diluted weighted-average shares outstanding[49](index=49&type=chunk) [Adjusted Segment Operating Profit (Non-GAAP) and Adjusted Segment Operating Profit Margin (Non-GAAP)](index=17&type=section&id=Adjusted%20Segment%20Operating%20Profit%20(Non-GAAP)%20and%20Adjusted%20Segment%20Operating%20Profit%20Margin%20(Non-GAAP)) Adjusted Segment Operating Profit is GAAP segment operating profit excluding specific adjustments, while the margin is this adjusted profit divided by GAAP segment revenues - Adjusted Segment Operating Profit is defined as GAAP segment operating profit, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, and other adjustments[49](index=49&type=chunk) - Adjusted Segment Operating Profit Margin is defined as Adjusted Segment Operating Profit (Non-GAAP) divided by GAAP segment revenues[49](index=49&type=chunk) [Adjusted Corporate Expenses (Non-GAAP)](index=17&type=section&id=Adjusted%20Corporate%20Expenses%20(Non-GAAP)) Adjusted Corporate Expenses are defined as GAAP corporate expenses, net, excluding transaction-related expenses, restructuring, impairment, and claims and litigation charges - Defined as GAAP corporate expenses, net, excluding transaction-related expenses and adjustments, restructuring, impairment, and related charges, claims and litigation charges, and other adjustments[49](index=49&type=chunk) [Adjusted Operating Profit (Non-GAAP)](index=18&type=section&id=Adjusted%20Operating%20Profit%20(Non-GAAP)) Adjusted Operating Profit is defined as GAAP income before interest and taxes, excluding amortization of intangibles, transaction expenses, LIFO adjustments, and other specific charges - Defined as GAAP income before interest expense and income taxes, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, claims and litigation charges, and other adjustments[51](index=51&type=chunk) [Free Cash Flow (Non-GAAP)](index=18&type=section&id=Free%20Cash%20Flow%20(Non-GAAP)) Free Cash Flow is defined as net cash provided by (used in) operating activities less payments for property, plant, and equipment and capitalized software expenditures - Defined as net cash provided by (used in) operating activities less payments for property, plant, and equipment and capitalized software expenditures[58](index=58&type=chunk)

Core Viewpoint - McKesson Corporation is set to report its first-quarter fiscal 2026 results, with expectations of revenue growth driven by the adoption of GLP-1 weight loss drugs and demand for specialty pharmaceuticals [1][2]. Revenue Growth - Revenue growth has been significantly influenced by the rapid adoption of GLP-1 weight loss drugs and sustained demand for branded pharmaceuticals [2]. - The rising demand for specialty pharmaceuticals has also played a crucial role in revenue expansion [2]. Segment Performance - The U.S. Pharmaceutical segment is expected to continue its steady growth, driven by strong demand for specialty pharmaceuticals, particularly oncology treatments [5]. - The Prescription Technology Solutions segment is projected to see revenues of $1.31 billion, reflecting a 5.7% year-over-year improvement, supported by strong demand for technology services [12]. - The Medical Surgical Solutions segment is estimated to generate $2.74 billion, indicating a 3.9% year-over-year increase, aided by a rebound in primary care visits [14]. Earnings Estimates - The Zacks Consensus Estimate for earnings is $8.23 per share, representing a 4.4% year-over-year improvement, while revenue estimates are pegged at $96.1 billion, indicating a 21.2% year-over-year surge [4]. Challenges - The sale of European operations and divestments in Canada may negatively impact sales [8]. - Lower distribution volumes of COVID-19 vaccines and changes in formularies could weigh on segmental performance [9][10]. - Margin pressures from low-margin GLP-1 sales and increased costs may limit earnings upside [10].

Market Overview - Recent market pullback due to new tariffs and a slowdown in job growth has shaken investor confidence, with July nonfarm payrolls rising by only 73,000, significantly below expectations [1] - June's job numbers were revised downward, indicating a weaker labor market than previously thought [1] - Renewed trade tensions have fueled expectations of a Federal Reserve rate cut and increased risk aversion, leading to sharp declines in major indices [1] Importance of Financial Health - Investors should not rely solely on stock price movements; understanding a company's fundamentals is crucial for informed decision-making in an unpredictable market [2] - Sales and earnings metrics can be misleading; the interest coverage ratio is a key indicator of a company's ability to meet financial obligations [3][4] Interest Coverage Ratio - The interest coverage ratio measures how effectively a company can pay interest on its debt, calculated as Earnings before Interest & Taxes (EBIT) divided by Interest Expense [5] - A higher interest coverage ratio indicates a greater ability to meet financial commitments, while a ratio below 1 suggests potential default risks [6][7] - Companies with strong interest coverage ratios include The Walt Disney Company, BJ's Wholesale Club, Ralph Lauren, and McKesson Corporation, all of which demonstrate solid debt-servicing capabilities [9][11] Investment Strategy - A favorable investment strategy includes selecting stocks with an interest coverage ratio above the industry average, a Zacks Rank of 1 or 2, and a VGM Score of A or B [8][10] - The selected companies have shown strong earnings surprises and are projected to grow sales and earnings in the coming year [9][11] Company Performance Highlights - **Walt Disney Company**: Zacks Rank 2, VGM Score B, with a trailing four-quarter earnings surprise of 16.4% and projected sales and EPS growth of 4% and 16.3% respectively [12] - **BJ's Wholesale Club**: Zacks Rank 2, VGM Score B, trailing four-quarter earnings surprise of 17.7%, with projected sales and EPS growth of 5.5% and 6.2% respectively [13] - **Ralph Lauren**: Zacks Rank 2, VGM Score B, trailing four-quarter earnings surprise of 9%, with projected sales and EPS growth of 3.8% and 11.8% respectively [14] - **McKesson Corporation**: Zacks Rank 2, VGM Score A, trailing four-quarter earnings surprise of 3.9%, with projected sales and EPS growth of 13.1% and 12.7% respectively [15]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying the right ones can be challenging due to associated risks and volatility [1] Group 1: Company Overview - McKesson (MCK) is highlighted as a recommended growth stock with 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 12.7% this year, significantly higher than the industry average of 6.9% [5] Group 2: Financial Metrics - McKesson's asset utilization ratio (sales-to-total-assets ratio) is 4.95, indicating that the company generates $4.95 in sales for every dollar in assets, compared to the industry average of 0.72 [6] - The company's sales are expected to grow by 13.1% this year, outpacing the industry average growth of 4.5% [7] Group 3: Earnings Estimates - There has been a positive trend in earnings estimate revisions for McKesson, with the current-year earnings estimates increasing by 0.1% over the past month [8] - McKesson has achieved a Zacks Rank of 2 (Buy) and a Growth Score of A, indicating strong potential for growth investors [10]

Investors with an interest in Medical stocks should continue to track McKesson and Cencora. These stocks will be looking to continue their solid performance. The Medical group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Has McKesson (MCK) been one of those stocks this year? By taking a look at the stock's year-to-date performance in comparison to its Medical peers, we might be able to answer that question. Another Medical stock, which ...

Core Insights - The analyst has shifted from a bullish stance to a "Hold" rating on McKesson Corporation (NYSE: MCK) over the last few quarters, indicating a cautious outlook on the stock's performance [1]. Group 1: Company Analysis - The analysis emphasizes a focus on high-quality companies that can outperform the market in the long run due to competitive advantages and high defensibility [1]. - The analyst's expertise includes a background in sociology, with a Master's Degree emphasizing organizational and economic sociology, which may influence the analytical approach [1]. Group 2: Market Focus - The analysis is primarily focused on companies in European and North American markets, without restrictions on market capitalization, covering both large-cap and small-cap companies [1].

Company Performance - McKesson's stock closed at $724.11, down 1.53% from the previous session, which is less than the S&P 500's loss of 0.07% [1] - Over the past month, McKesson's shares have appreciated by 3.83%, outperforming the Medical sector's loss of 1.3% and lagging behind the S&P 500's gain of 3.94% [1] Earnings Estimates - McKesson is expected to report earnings of $8.25 per share on August 6, 2025, reflecting a year-over-year growth of 4.7% [2] - The consensus estimate for revenue is projected at $96.08 billion, indicating a 21.18% increase compared to the same quarter of the previous year [2] Full-Year Projections - The full-year Zacks Consensus Estimates for McKesson are earnings of $37.25 per share and revenue of $405.91 billion, representing year-over-year changes of +12.71% and +13.05%, respectively [3] Analyst Sentiment - Recent changes to analyst estimates for McKesson indicate evolving short-term business trends, with positive revisions suggesting optimism about the business outlook [3][4] Zacks Rank - McKesson currently holds a Zacks Rank of 2 (Buy), with the Zacks Consensus EPS estimate shifting 0.16% upward over the past month [5] Valuation Metrics - McKesson's Forward P/E ratio is 19.74, which is a premium compared to the industry average Forward P/E of 18.21 [6] - The company has a PEG ratio of 1.47, while the Medical - Dental Supplies industry average PEG ratio is 1.67 [6] Industry Context - The Medical - Dental Supplies industry, part of the Medical sector, has a Zacks Industry Rank of 29, placing it in the top 12% of over 250 industries [7]

Group 1 - McKesson has an average brokerage recommendation (ABR) of 1.47, indicating a consensus between Strong Buy and Buy from 17 brokerage firms, with 76.5% of recommendations being Strong Buy [2][5][14] - The Zacks Consensus Estimate for McKesson's earnings has increased by 0.2% over the past month to $37.25, reflecting analysts' growing optimism about the company's earnings prospects [13] - McKesson currently holds a Zacks Rank 2 (Buy), suggesting a positive outlook for the stock based on earnings estimate revisions [14] Group 2 - Brokerage analysts tend to exhibit a strong positive bias in their recommendations, with five "Strong Buy" ratings for every "Strong Sell," which may mislead investors [6][10] - The ABR is based solely on brokerage recommendations and may not be timely, while the Zacks Rank is a quantitative model that quickly reflects earnings estimate revisions, making it a more reliable indicator of near-term stock performance [9][12] - The Zacks Rank maintains a balance among the five ranks it assigns, ensuring a proportional application across all stocks for which analysts provide earnings estimates [11]

Core Insights - Zacks Premium provides various tools to enhance stock market investment confidence and knowledge [1][2] - The Zacks Style Scores serve as complementary indicators to the Zacks Rank, helping investors select stocks with high potential for market outperformance [3][8] Zacks Style Scores Overview - The Zacks Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score [4][5][6][7] - Each stock is rated from A to F based on its characteristics, with A indicating the highest potential for outperformance [4] Value Score - Focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales [4] Growth Score - Evaluates a company's financial health and future growth potential through earnings, sales, and cash flow analysis [5] Momentum Score - Targets stocks with upward or downward price trends, utilizing recent price changes and earnings estimate shifts [6] VGM Score - Combines Value, Growth, and Momentum Scores to provide a comprehensive assessment of stocks [7] Zacks Rank and Performance - The Zacks Rank is a proprietary model that uses earnings estimate revisions to identify winning stocks, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8][9] Stock Recommendation: McKesson Corporation - McKesson Corporation, a healthcare services and IT company, holds a Zacks Rank of 2 (Buy) and a VGM Score of A, indicating strong growth potential [13] - The company is projected to have a year-over-year earnings growth of 12.7% for the current fiscal year, supported by positive earnings estimate revisions [14]