McKesson Exceeds EPS, Q3 Profit Surges

Core Insights - McKesson reported mixed financial results for Q3 of fiscal 2025, beating earnings expectations but slightly missing revenue targets [1][2] - The company achieved an adjusted EPS of $8.03, surpassing the projected $8.01, while revenue was $95.3 billion, below the estimated $96 billion [1][3] Financial Performance - Operating profit surged by 91% year-over-year, reaching $1.29 billion, driven by enhanced efficiency and cost controls [2][6] - Revenue for the U.S. Pharmaceutical segment was $87.1 billion, reflecting strong growth due to increased prescription volumes [6] - The Prescription Technology Solutions segment saw a 14% revenue increase to $1.4 billion, attributed to growth in third-party logistics and technology services [7] - The Medical-Surgical Solutions segment experienced a 3% revenue decline to $2.9 billion, linked to reduced seasonal vaccine and testing activities [8] - Net income rose by 49% year-over-year to $879 million [3] Business Overview - McKesson is a key player in the healthcare supply chain, focusing on the distribution of medical supplies and pharmaceutical products [4] - The company has been consolidating its operations by exiting some European markets to strengthen its core business in the U.S. and Canada [5] Strategic Developments - McKesson secured a controlling interest in PRISM Vision Holdings, expanding its specialty care offerings [9] - The company divested its Canadian retail businesses, including Rexall, to focus on core growth markets [9] - Despite strategic efforts, McKesson reported negative free cash flow of $2.2 billion in Q3 due to investments and share buybacks [9] Future Outlook - McKesson raised its fiscal 2025 adjusted EPS guidance to a range of $32.55 to $32.95, indicating confidence in its strategic initiatives [10] - The anticipated growth rate for the adjusted EPS is projected at 19% to 20% [10] - The company is expected to navigate competitive and regulatory pressures, with notable competitors like Cardinal Health posing challenges [11]