McKesson Corporation (MCK) Bundle
A Brief History of McKesson Corporation
Company Overview
McKesson Corporation, founded in 1833, is one of the oldest and largest healthcare companies in the United States. It provides pharmaceuticals and healthcare services to various healthcare providers, including hospitals, pharmacies, and clinics.
Recent Financial Performance
As of September 30, 2024, McKesson reported a total revenue of $66.6 billion for the six-month period ending on that date, reflecting an increase from $58.2 billion for the same period in 2023. The net income for the same period was $1.247 billion, down from $1.700 billion in 2023. The diluted earnings per share (EPS) for the six months was $8.89, compared to $11.95 a year earlier.
Stock Performance and Repurchase Activity
In the three months ended September 30, 2024, McKesson repurchased 2.9 million shares at an average price of $533.46, totaling $1.5 billion. The company has an ongoing share repurchase program with a remaining authorization of $8.6 billion as of the end of September 2024.
Balance Sheet Highlights
As of September 30, 2024, McKesson's total assets were $72.429 billion, up from $67.443 billion as of March 31, 2024. The total liabilities stood at $75.071 billion, with a stockholders' deficit of $2.642 billion. Cash and cash equivalents decreased to $2.511 billion from $4.585 billion at the end of March 2024.
| Financial Metrics | September 30, 2024 | March 31, 2024 | September 30, 2023 |
|---|---|---|---|
| Total Revenue | $66.6 billion | $58.2 billion | $57.5 billion |
| Net Income | $1.247 billion | $1.700 billion | $1.622 billion |
| Diluted EPS | $8.89 | $11.95 | $10.56 |
| Total Assets | $72.429 billion | $67.443 billion | $66.5 billion |
| Total Liabilities | $75.071 billion | $69.414 billion | $68.2 billion |
| Cash and Cash Equivalents | $2.511 billion | $4.585 billion | $3.542 billion |
Operational Highlights
McKesson has continued to expand its operations through strategic acquisitions and partnerships. Notably, the company completed the acquisition of several small pharmaceutical distribution companies to enhance its market presence and distribution capabilities.
Market Position and Future Outlook
As of 2024, McKesson remains a leader in the healthcare distribution sector, positioned to benefit from the ongoing growth in healthcare spending and the increasing demand for pharmaceuticals. The company aims to leverage its extensive logistics network and technology investments to improve efficiency and customer service.
A Who Owns McKesson Corporation (MCK)
Major Shareholders
As of September 30, 2024, McKesson Corporation (MCK) had approximately 126.9 million shares of common stock outstanding. The major shareholders include institutional investors, mutual funds, and individual shareholders. The top institutional shareholders are as follows:
| Institution | Shares Owned | Percentage of Total Shares |
|---|---|---|
| The Vanguard Group, Inc. | 15.2 million | 12.0% |
| BlackRock, Inc. | 14.8 million | 11.6% |
| State Street Corporation | 10.4 million | 8.2% |
| Wellington Management Group LLP | 9.1 million | 7.1% |
| JP Morgan Chase & Co. | 6.9 million | 5.4% |
Insider Ownership
Insider ownership is also a significant factor in the ownership structure of McKesson. As of September 30, 2024, insiders held approximately 1.5% of the total shares outstanding. This includes executives and board members who have significant stakes in the company:
| Name | Position | Shares Owned |
|---|---|---|
| Brian Tyler | CEO | 250,000 |
| James Beer | CFO | 180,000 |
| Meredith McGowan | Chief Legal Officer | 120,000 |
Shareholder Actions
During the first half of fiscal 2025, McKesson repurchased $2.0 billion of common stock, reflecting its strategy to return capital to shareholders. The company has a repurchase authorization of $8.6 billion remaining as of September 30, 2024.
Dividends
McKesson Corporation declared a quarterly dividend of $0.71 per share in July 2024, an increase from the previous $0.62. The total dividends paid to shareholders in the first half of fiscal 2025 amounted to $162 million.
Market Capitalization
As of September 30, 2024, McKesson's market capitalization was approximately $68 billion, driven by its robust business performance and strategic acquisitions.
McKesson Corporation (MCK) Mission Statement
Mission Statement Overview
The mission of McKesson Corporation is to improve healthcare by providing the necessary products, services, and solutions to its customers. The company aims to deliver better health outcomes for patients and communities by supporting the healthcare system with innovative technologies and comprehensive supply chain solutions.
Core Values
- Integrity: Conducting business with honesty and ethical practices.
- Customer-Centric: Focusing on the needs of customers to enhance satisfaction.
- Innovation: Investing in new technologies to improve healthcare delivery.
- Collaboration: Working together with partners to achieve shared goals.
- Accountability: Taking responsibility for actions and outcomes.
Financial Performance Metrics
As of September 30, 2024, McKesson Corporation reported significant financial metrics that reflect its operational success:
| Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Six Months Ended September 30, 2024 | Six Months Ended September 30, 2023 |
|---|---|---|---|---|
| Revenues (in millions) | $93,651 | $77,215 | $172,934 | $151,698 |
| Net Income (in millions) | $287 | $703 | $1,247 | $1,700 |
| Diluted Earnings per Share | $1.87 | $4.92 | $8.89 | $11.95 |
| Gross Profit (in millions) | $3,248 | $3,069 | $6,400 | $6,091 |
| Operating Income (in millions) | $578 | $951 | $1,607 | $2,051 |
Strategic Initiatives
McKesson is focused on several strategic initiatives aimed at enhancing its mission:
- Investing in technology solutions to streamline operations and improve patient care.
- Expanding partnerships with healthcare providers to enhance service delivery.
- Implementing sustainability practices to reduce environmental impact.
- Enhancing supply chain efficiencies to ensure timely delivery of pharmaceuticals.
Recent Developments
As of September 30, 2024, McKesson has made significant strides in its operations:
- Completed a public offering of 4.25% Notes due September 2029 for $500 million, aimed at refinancing existing debt.
- Announced an agreement to acquire a 70% interest in Community Oncology Revitalization Enterprise Ventures for approximately $2.49 billion.
- Returned $2.2 billion to shareholders through stock repurchases and dividends, reflecting a commitment to shareholder value.
Segment Performance
McKesson operates through several segments, each contributing to the overall mission:
| Segment | Three Months Ended September 30, 2024 Revenue (in millions) | Three Months Ended September 30, 2023 Revenue (in millions) |
|---|---|---|
| U.S. Pharmaceutical | $85,726 | $69,766 |
| Prescription Technology Solutions | $1,265 | $1,140 |
| Medical-Surgical Solutions | $2,948 | $2,834 |
| International | $3,709 | $3,475 |
Outlook
Looking ahead, McKesson Corporation is committed to enhancing its mission by focusing on operational excellence, strategic partnerships, and technological advancements to improve healthcare delivery and outcomes. The company continues to adapt to market changes and regulatory developments to sustain its leadership position in the healthcare industry.
How McKesson Corporation (MCK) Works
Overview of McKesson Corporation
McKesson Corporation operates as a healthcare services and information technology company. It is primarily involved in the distribution of pharmaceuticals and provides various healthcare management solutions. As of 2024, the company has segmented its operations into four primary areas: U.S. Pharmaceutical, Prescription Technology Solutions, Medical-Surgical Solutions, and International.
Financial Performance
For the six months ended September 30, 2024, McKesson reported total revenues of $172.9 billion, an increase of 14% compared to $151.7 billion for the same period in 2023. The breakdown of revenues by segment is as follows:
| Segment | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| U.S. Pharmaceutical | $157.4 billion | $136.9 billion | 15% |
| Prescription Technology Solutions | $2.5 billion | $2.4 billion | 5% |
| Medical-Surgical Solutions | $5.6 billion | $5.4 billion | 3% |
| International | $7.4 billion | $6.9 billion | 7% |
Earnings and Share Performance
For the six months ended September 30, 2024, McKesson’s net income attributable to the corporation was $1.2 billion, down from $1.6 billion in the same period of 2023. Diluted earnings per share for the same period were $8.89, compared to $11.95 in 2023.
| Measure | 2024 | 2023 |
|---|---|---|
| Net Income (in billions) | $1.2 | $1.6 |
| Diluted Earnings per Share | $8.89 | $11.95 |
Cash Flow and Liquidity
As of September 30, 2024, McKesson reported cash, cash equivalents, and restricted cash totaling $2.5 billion. The company had a working capital deficit of $5.4 billion.
| Measure | As of September 30, 2024 | As of March 31, 2024 |
|---|---|---|
| Cash and Cash Equivalents | $2.5 billion | $4.6 billion |
| Working Capital | $(5.4 billion) | $(4.4 billion) |
Debt and Capital Management
McKesson’s total debt as of September 30, 2024, was $5.7 billion, with a debt-to-capital ratio of 158.8%. In July 2024, the Board authorized an increase of $4.0 billion for share repurchases, bringing the total remaining authorization for repurchases to $8.6 billion.
| Measure | As of September 30, 2024 |
|---|---|
| Total Debt | $5.7 billion |
| Debt to Capital Ratio | 158.8% |
| Share Repurchase Authorization Remaining | $8.6 billion |
Operational Highlights
During the six months ended September 30, 2024, McKesson returned $2.2 billion to shareholders through common stock repurchases and dividend payments. The company repurchased approximately 2.9 million shares for $1.5 billion at an average price of $533.46 per share.
Segment Performance Analysis
For the three months ended September 30, 2024, segment operating results were as follows:
| Segment | Operating Profit (2024) | Operating Profit (2023) | Change (%) |
|---|---|---|---|
| U.S. Pharmaceutical | $1.1 billion | $593 million | 81% |
| Prescription Technology Solutions | $205 million | $238 million | (14%) |
| Medical-Surgical Solutions | $89 million | $244 million | (64%) |
| International | $(508 million) | $66 million | (870%) |
Regulatory and Legal Challenges
McKesson continues to face significant legal challenges related to opioid distribution, with an estimated liability of $6.4 billion as of September 30, 2024. Payments of $500 million were made in connection with various settlements during the quarter.
Recent Acquisitions and Strategic Moves
On August 26, 2024, McKesson announced a definitive agreement to acquire a 70% controlling interest in Community Oncology Revitalization Enterprise Ventures, LLC for approximately $2.49 billion.
How McKesson Corporation (MCK) Makes Money
Revenue Streams
McKesson Corporation generates revenue primarily through four segments: U.S. Pharmaceutical, Prescription Technology Solutions, Medical-Surgical Solutions, and International.
U.S. Pharmaceutical Segment
The U.S. Pharmaceutical segment is the largest contributor to McKesson's revenue. For the six months ended September 30, 2024, revenues increased by $20.5 billion or 15% compared to the same period in the prior year, totaling $157.4 billion. This growth was driven by:
- Increased sales to pharmacies and healthcare providers, which rose by $17.1 billion.
- Sales to specialty practices and other customers increased by $3.4 billion.
- Higher volumes from retail national account customers and growth in specialty pharmaceuticals.
Prescription Technology Solutions
For the six months ended September 30, 2024, revenues in this segment increased by $122 million or 5%, totaling $2.5 billion. The revenue growth was attributed to:
- Increased volumes from third-party logistics.
- Higher technology service revenues.
Medical-Surgical Solutions
This segment reported revenues of $5.6 billion for the six months ended September 30, 2024, an increase of $139 million or 3% compared to the prior year. Key drivers included:
- Sales to primary care customers increased by $159 million.
- Sales to extended care customers rose by $2 million.
International Segment
International revenues for the six months ended September 30, 2024, increased by $457 million or 7%, totaling $7.4 billion. The growth was primarily from:
- Increased sales in Canada by $520 million due to higher pharmaceutical distribution volumes.
- Sales growth in Norway by $66 million, driven by retail pharmacy expansion.
Financial Performance Overview
For the three months ended September 30, 2024, McKesson reported total revenues of $93.7 billion, a 21% increase from $77.2 billion in the same period of the prior year. The gross profit for this period was $3.2 billion, with a gross profit margin of 3.47%.
| Financial Metric | Q2 2024 | Q2 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $93.7 billion | $77.2 billion | 21% |
| Gross Profit | $3.2 billion | $3.1 billion | 6% |
| Operating Income | $578 million | $951 million | (42%) |
| Net Income | $287 million | $703 million | (59%) |
| Earnings per Share (Diluted) | $1.87 | $4.92 | (62%) |
Operating Expenses
For the six months ended September 30, 2024, total operating expenses amounted to $4.8 billion, representing a 19% increase from $4.0 billion in the prior year. Key components included:
- Selling, distribution, general, and administrative expenses increased by $542 million to $4.5 billion.
- Restructuring, impairment, and related charges rose to $181 million from $80 million in the prior year.
Debt and Financing Activities
McKesson's financing activities included a public offering of 4.25% Notes due September 15, 2029 for $500 million, with proceeds of approximately $496 million. For the six months ended September 30, 2024, the company returned $2.2 billion to shareholders through stock repurchases and dividend payments.
Opioid-Related Litigation
As of September 30, 2024, McKesson had an estimated liability of $6.4 billion related to opioid claims. Payments made during the three months ended September 30, 2024, totaled $500 million associated with these claims. The company's financial results may be impacted by ongoing litigation and settlements.
Conclusion on Performance Metrics
Despite revenue growth across its segments, McKesson's net income and earnings per share showed significant declines, influenced by higher operating expenses and litigation costs. The company continues to navigate complex market conditions while seeking operational efficiencies and growth opportunities.
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Resources:
- McKesson Corporation (MCK) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of McKesson Corporation (MCK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View McKesson Corporation (MCK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.