# McKesson Corporation (NYSE: MCK) — Narrative

Sources: Annual Report on Form 10-K for fiscal 2026 (year ended March 31, 2026), SEC accession 0000927653-26-000069, filed May 8, 2026; Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, accession 0000927653-26-000234, filed August 5, 2026; Current Report on Form 8-K dated August 5, 2026 and its Exhibit 99.1 earnings release, accession 0000927653-26-000232; and Current Report on Form 8-K dated August 25, 2026, accession 0000927653-26-000247.

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## Business

*From the fiscal 2026 Form 10-K, accession 0000927653-26-000069.*

McKesson is a healthcare services company whose principal business is buying pharmaceuticals and medical products in bulk and distributing them, at very thin margins on very large volumes, to the pharmacies, hospitals, physician practices and care sites that dispense them. In fiscal 2026 it moved $403.4 billion of revenue through that model on $14.6 billion of gross profit — a gross margin of roughly 3.6% — and earned $4.8 billion of net income attributable to McKesson. Alongside distribution it sells the software, sourcing programs, reimbursement services and practice-management capabilities that its customers use to run their own economics, and it owns and operates provider platforms in oncology and ophthalmology. Its fiscal year runs from April 1 to March 31. It was incorporated in Delaware on July 7, 1994 and traces its business roots to 1833.

Revenue is extraordinarily concentrated. In fiscal 2026 the ten largest customers, including group purchasing organizations, accounted for approximately 73% of total consolidated revenues; the single largest customer, CVS Health Corporation, accounted for approximately 24%, and the next two largest for 11% and 10%. The ten largest customers were approximately 43% of total trade accounts receivable at March 31, 2026, with CVS alone at approximately 21%. The CVS pharmaceutical distribution partnership was extended in fiscal 2023 and runs to June 2027. Supply is concentrated too: the largest supplier was 11% of total purchases in fiscal 2026 and the ten largest were approximately 71%. Foreign operations were approximately 4% of consolidated revenues in each of fiscal 2026 and fiscal 2025.

Beginning in the second quarter of fiscal 2026 the company moved to a four-segment reporting structure, with all prior periods recast. Fiscal 2026 revenues and segment operating profit were:

| Segment | FY2026 revenue | FY2025 revenue | FY2026 segment operating profit | FY2025 |
| --- | --- | --- | --- | --- |
| North American Pharmaceutical | $336,652M | $304,507M | $3,658M | $2,945M |
| Oncology & Multispecialty | $48,423M | $36,862M | $1,149M | $767M |
| Prescription Technology Solutions | $5,805M | $5,216M | $1,044M | $875M |
| Medical-Surgical Solutions | $11,507M | $11,380M | $938M | $779M |
| Other | $1,043M | $1,086M | $590M | $54M |
| **Total revenues** | **$403,430M** | **$359,051M** | | |

Corporate expenses, net were $931 million in fiscal 2026 against $796 million in fiscal 2025.

**North American Pharmaceutical** is the core wholesaling franchise — branded, generic, specialty, biosimilar and over-the-counter drugs plus other healthcare products, sold to customers in the U.S. and Canada, together with financial, operational and clinical solutions sold to pharmacies. The U.S. business runs 27 distribution centers including two strategic redistribution centers totalling over 740,000 square feet, and serves three primary channels: retail national accounts (national and regional chains, food-and-drug combinations, mail order, mass merchandisers), community pharmacy and health, and institutional healthcare providers (hospitals, health systems, integrated delivery networks, long-term care). Generic sourcing runs largely through ClarusONE Sourcing Services LLP, a joint venture with Walmart. Customer-facing programs include the McKesson Connect ordering system, Central Fill, McKesson SynerGx and OneStop Generics purchasing programs, the Health Mart franchise network of approximately 3,900 independently-owned pharmacies, Health Mart Atlas managed-care services, and McKesson Reimbursement Advantage. McKesson Canada is one of Canada's largest pharmaceutical wholesale and retail distributors; its retail arm operates approximately 2,600 independent pharmacies under five banners (IDA, Guardian, Remedy'sRx, Proxim, Uniprix), and its specialty side includes INVIVA private infusion clinics and PDCI Market Access.

**Oncology & Multispecialty** is the provider-platform segment: specialty drug distribution, group purchasing organizations, infusion services, direct-to-patient pharmacy, InspiroGene cell and gene therapy services, practice consulting and vaccine distribution. It supports The U.S. Oncology Network, one of the largest networks of physician-led community-based oncology practices in the U.S.; PRISM Vision Holdings in retina and ophthalmology; Sarah Cannon Research Institute in clinical research; and Ontada, the technology business. This is the segment McKesson is deliberately building out, and it grew revenue 31% in fiscal 2026 on the back of the PRISM Vision and Core Ventures acquisitions plus organic specialty growth.

**Prescription Technology Solutions** sits between biopharma manufacturers, pharmacies, payors and patients, selling electronic prior authorization, prescription price transparency, benefit insight, dispensing support, patient enrollment, and third-party logistics and wholesale distribution support. It has connections with most electronic health record systems, over 50,000 pharmacies, more than 1,000,000 providers and most pharmacy benefit managers and health plans, and has supported over 650 biopharma brands. In the past year the segment says it helped patients save approximately $10 billion on brand and specialty medications, prevented an estimated 12 million prescriptions from being abandoned on affordability grounds, and helped patients access medicine more than 135 million times. It is much the highest-margin of the four segments, at a 17.98% segment operating margin in fiscal 2026 versus 1.09% for North American Pharmaceutical.

**Medical-Surgical Solutions** distributes medical-surgical supplies, laboratory equipment and pharmaceuticals to more than 336,000 U.S. non-acute and alternate-site customers — physician offices, surgery centers, post-acute and extended care, hospital reference labs, home health, government markets and online retailers — offering more than 270,000 national-brand products and more than 4,000 own-brand products. **During fiscal 2026 McKesson announced its intention to separate this segment into an independent company.** As part of that strategy, on April 20, 2026 it announced a definitive agreement under which funds managed by affiliates of Apollo Global Management would acquire an approximately 13% minority interest in the segment through an investment of approximately $1.25 billion in the segment's convertible preferred equity.

Former Norwegian operations, reported in Other, were sold during fiscal 2026.

Primary competitors in distribution, wholesaling and logistics are Cencora, Inc. and Cardinal Health, Inc., both of which also offer combinations of distribution, GPO and provider-services capability that compete with Oncology & Multispecialty. Research and development expense was $103 million, $91 million and $77 million in fiscal 2026, 2025 and 2024.

The regulatory perimeter is wide and is itself part of the business description. Federal and state fraud-and-abuse law (anti-kickback, physician self-referral, False Claims Act, 60-day overpayment return) governs McKesson's relationships with manufacturers and providers; the Drug Supply Chain Security Act imposes unit-level traceability and licensure standards on the distribution chain; the DEA, FDA, state boards of pharmacy and CMS all license or inspect its operations. Live policy items flagged in the filing include the Inflation Reduction Act's Medicare drug-price negotiation, inflation rebates and Part D cost-sharing cap; the One Big Beautiful Bill enacted July 2025, expected to reduce Medicaid enrollment and federal funding to state programs; Executive Order 14297 on most-favored-nation drug pricing, which also directs HHS to enable direct-to-consumer purchasing that may bypass supply-chain intermediaries; a CMS rule effective January 1, 2026 on bona fide service fees requiring manufacturers to obtain certifications from wholesalers that fees are not passed on to customers (CMS waived the initial Q1 2026 reporting deadline of April 30, 2026); two CMS rules proposed in December 2025 that would test mandatory manufacturer rebate models tied to international pricing benchmarks; ongoing 340B program litigation and HRSA's contested rebate-model pilot; the expiry of enhanced ACA premium subsidies on December 31, 2025; and state laws capping the price of certain drugs distributed by wholesalers.

## Risks

*From the fiscal 2026 Form 10-K, accession 0000927653-26-000069, Item 1A.*

**Opioid and controlled-substance litigation.** McKesson is a defendant in many matters alleging claims related to the distribution of controlled substances, brought by states, provinces, counties, municipalities, businesses, groups and individuals, on theories including negligence and public nuisance. Some proceedings have been resolved by negotiated outcome and the company operates under consent decrees issued by state courts governing its distribution of controlled substances; others are not resolved by settlement, and many raise novel theories with unpredictable outcomes. At March 31, 2026 the accrued liability for opioid-related claims was $5.7 billion, and the company states it cannot reasonably estimate the upper or lower end of the range of ultimate possible losses for all opioid matters.

**Customer and supplier concentration.** One customer at approximately 24% of revenues and approximately 21% of trade receivables, ten customers at approximately 73% and approximately 43%, and ten suppliers at approximately 71% of purchases. A purchase reduction, a non-renewal, a renewal on worse terms, a payment default or a bankruptcy at that scale is material on its own — as the Rite Aid bankruptcy demonstrated, costing a $725 million bad-debt charge in fiscal 2024.

**Supplier economics and pricing.** Certain distribution agreements compensate McKesson as a percentage of purchases, and some contain an inflation-based component under which the company benefits when manufacturers raise prices on inventory already held. A reduction in the frequency or magnitude of manufacturer price increases, or restrictions on inventory available to it, would directly compress gross margin. Fiscal 2026 showed this mechanism running in reverse: brand deflation produced a $210 million LIFO credit against a $82 million charge the prior year.

**Healthcare reform and reimbursement.** Changes in reimbursement methodology — Medicare and Medicaid rate cuts, shifts from fee-for-service toward value-based and risk-sharing payment, growth of managed care — reduce margins for McKesson and for its customers. The IRA, OBBBA, Executive Order 14297, CMS bona fide service fee rulemaking and proposed rebate models, 340B developments and state drug-pricing legislation are all named as live exposures whose cumulative impact the company says is difficult to predict.

**The Medical-Surgical separation may not complete as planned.** The separation is intended to be effected ultimately through a split-off or spin-off, or a combination, qualifying as tax-free to the company and its stockholders for U.S. federal income tax purposes. Named risks include diversion of management attention, an IRS or court determination that the transaction is taxable, and difficulty maintaining transitional services, standalone functions and business relationships at the separated company. A related legacy exposure: if the March 2020 split-off of the company's interest in Change Healthcare fails to qualify for its intended tax-free treatment, and Change does not honour its indemnity under the Tax Matters Agreement, the resulting tax could significantly affect McKesson's financial position.

**Cybersecurity.** The company states plainly that its technology systems and those of its third parties *have* experienced cybersecurity incidents and are subject to future attacks, that healthcare companies are increasingly targeted, and that adversarial AI is raising both the likelihood and the difficulty of detection. It also notes it may take considerable time to investigate and evaluate the full impact of an incident. This risk factor is not hypothetical — see Subsequent events below.

**Regulatory, licensing and compliance exposure.** Loss of the ability to purchase, store or distribute pharmaceuticals including controlled substances, through noncompliance with DEA, FDA, state board or CMS requirements, would be existential to the distribution franchise. Separately, states have enacted and others are considering taxes and assessments on controlled-substance distribution.

**Competition and consolidation.** Consolidation on both sides — a few large suppliers controlling a significant share of the pharmaceuticals market, customers joining GPOs — increases counterparties' bargaining power and can erode margin, while also concentrating credit risk.

**Goodwill and intangibles.** $11.3 billion of goodwill and $4.1 billion of net intangible assets at March 31, 2026, against $10.0 billion and $1.5 billion a year earlier; annual testing in fiscal 2026, 2025 and 2024 found no impairment, but the company notes that changes in key assumptions could produce a charge.

**Other named risks** include generic-pharmaceutical availability and pricing (ClarusONE sourcing disruption, patent-infringement claims on generic launches), execution risk on acquisitions and divestitures and on the growth strategy generally, restructuring initiatives failing to deliver, AI adoption risks (false or biased outputs, model degradation, vendor dependence, new attack surfaces), privacy and data-protection compliance across divergent jurisdictions, third-party outsourcing, government-contract funding and audit risk, tax legislation including the OECD Pillar Two 15% global minimum tax, credit-market access and rating downgrades, inflation and foreign-currency exposure, tariffs and trade restrictions, climate change, and an exclusive-forum bylaw provision naming the Delaware courts.

## Management's discussion — fiscal 2026

*From the fiscal 2026 Form 10-K, accession 0000927653-26-000069, Item 7.*

Fiscal 2026 revenues rose 12% to $403.4 billion, gross profit rose 9% to $14.55 billion, total operating expenses *fell* 6% to $8.34 billion, and other income, net rose 17% to $236 million. Operating income was $6,212 million against $4,422 million. Diluted earnings per share attributable to McKesson rose to $38.38 from $25.72, and net income attributable to McKesson to $4,762 million from $3,295 million.

**What drove revenue.** Market growth in North American Pharmaceutical — higher volumes primarily from retail national account customers, growing drug utilization and newly launched products, partly offset by branded-to-generic conversion and branded price decreases — plus higher specialty pharmaceutical sales in Oncology & Multispecialty. North American Pharmaceutical revenue rose $32.1 billion or 11%, with U.S. pharmacy and provider sales up $31.6 billion. Oncology & Multispecialty rose $11.6 billion or 31%, driven by added providers in practice management and specialty growth. Prescription Technology Solutions rose $589 million or 11% on third-party logistics volume and technology services. Medical-Surgical Solutions rose $127 million or 1%.

**What drove gross profit.** Growth in Oncology & Multispecialty (providers added in practice management, specialty pharmaceutical growth) and higher volumes in Prescription Technology Solutions. Two swing items sit inside gross profit and run in opposite directions year on year: the company's share of antitrust legal settlements was a $23 million gain in fiscal 2026 against $444 million in fiscal 2025 — a $421 million headwind — while LIFO turned from a $82 million charge to a $210 million credit on brand deflation, a $292 million tailwind. Fiscal 2025 gross profit also carried a $58 million inventory impairment tied to restructuring.

**Why operating expenses fell.** The single largest reason is the $480 million net gain on the sale of the Norway disposal group recorded in SDG&A, of which $503 million sits in Other and a $23 million net charge in Corporate; that net gain is itself after a $164 million loss from recycled accumulated other comprehensive loss. Fiscal 2025 by contrast carried $667 million of charges to remeasure the Canadian retail disposal group (Rexall and Well.ca) to fair value less costs to sell, and a $108 million opioid claims charge, partly offset by a $206 million credit reassessing the Rite Aid prepetition reserve. Fiscal 2026 added $77 million of net charges for the planned Medical-Surgical separation and $245 million of restructuring, impairment and related charges (against $286 million in fiscal 2025).

**Portfolio moves in the year.** On April 1, 2025 McKesson completed the acquisition of an 80% controlling interest in PRISM Vision Holdings, LLC for $875 million in cash, with prior owners including practice management and physicians retaining 20%; it reports in Oncology & Multispecialty. On June 2, 2025 it completed the acquisition of a 70% controlling interest in Community Oncology Revitalization Enterprise Ventures, LLC ("Core Ventures"), the business and administrative services organization established by Florida Cancer Specialists & Research Institute, for $2.5 billion in cash, with FCS physicians retaining 30%; it too reports in Oncology & Multispecialty. On January 30, 2026 McKesson completed the sale of the Norway disposal group for an adjusted purchase price of $821 million.

**Restructuring.** Two programs were disclosed. The fiscal 2025 enterprise-wide technology-operating-model initiative anticipates $650–700 million of total charges, substantially complete in fiscal 2028; it took $170 million in fiscal 2026 and $240 million in fiscal 2025 (plus $58 million of fiscal 2025 inventory impairment in cost of sales). A fourth-quarter fiscal 2026 initiative inside Prescription Technology Solutions anticipates $200–250 million of charges through fiscal 2029, with only immaterial amounts booked in fiscal 2026.

**Below the line.** Other income, net rose mainly on the absence of a prior-year $87 million U.K. pension termination charge and a prior-year $43 million equity-method loss, plus better interest income, partly offset by the absence of a prior-year $101 million net gain on healthcare growth-stage equity securities. Interest expense fell to $247 million from $265 million on derivative-portfolio changes and higher capitalized interest. The income tax rate was 17.8% versus 20.1%, on tax expense of $1.1 billion versus $878 million. Net income attributable to noncontrolling interests rose to $337 million from $186 million, driven by Core Ventures and PRISM Vision contributions and higher ClarusONE volumes, and including a $122 million charge to remeasure the Core Ventures redeemable noncontrolling interest to redemption value. Weighted-average diluted shares fell to 124.1 million from 128.1 million.

**Cash and capital allocation.** Operating activities provided $6,155 million against $6,085 million, an increase of $70 million: net income up $1.6 billion and lower net non-cash items of $836 million, a $1.9 billion benefit from receivables on favourable collection timing and branded price decreases, offset by a $4.0 billion use from accounts payable on vendor payment scheduling and period-end day-of-week timing, with a $1.2 billion benefit from inventory. Investing used $3.4 billion against $733 million, including $3.4 billion of net cash for acquisitions ($2.5 billion Core Ventures, $875 million PRISM Vision), $830 million of proceeds from sales of businesses and investments (including $693 million net of cash divested from Norway), and $436 million plus $309 million of property and capitalized-software capital expenditure. Financing used $4.6 billion against $4.0 billion. On May 30, 2025 the company issued $650 million of 4.65% Notes due 2030, $650 million of 4.95% Notes due 2032 and $700 million of 5.25% Notes due 2035 for net proceeds of $2.0 billion, used with cash on hand to fund Core Ventures; €600 million of 1.50% Notes matured November 14, 2025 and $500 million of 0.90% Notes matured December 3, 2025, both repaid from cash.

McKesson returned $5.1 billion to shareholders in fiscal 2026 — $4.8 billion of repurchases and $381 million of dividends — with $2.7 billion of repurchase authorization remaining at March 31, 2026. In March 2026 it entered a $2.25 billion accelerated share repurchase program. The quarterly dividend was raised on July 29, 2025 to $0.82 from $0.71; dividends declared were $3.17 per share in fiscal 2026 against $2.75.

**Balance sheet points.** Trade and notes receivables were $24.5 billion before allowances of $204 million at March 31, 2026, with the allowance at 0.8% of receivables against 2.1% a year earlier; the fiscal 2026 bad-debt provision was a $100 million charge, against a $130 million credit in fiscal 2025 and an $819 million charge in fiscal 2024 (which included $725 million on Rite Aid). Inventories were $24.2 billion against $23.0 billion, approximately 59% on LIFO (63% prior year), with LIFO reserves of $99 million against $309 million. Cash and equivalents were $4.0 billion against $5.7 billion, including approximately $1.8 billion held outside the U.S. (against $2.9 billion). The uncertain tax position liability was approximately $1.2 billion. McKesson operates with a **stockholders' deficit**, and its debt-to-capital ratio increased in fiscal 2026 on repurchases, dividends and debt repayment. Of the $5.7 billion opioid accrual, $601 million was estimated to be paid within twelve months; the majority is payable to governmental entities in annual installments through 2038.

**Fiscal 2026 segment profit commentary.** North American Pharmaceutical operating profit rose largely on the absence of the prior-year Canadian retail remeasurement charge, higher distribution volumes, the $210 million LIFO credit, and the absence of a prior-year $57 million opioid charge — partly offset by the far smaller antitrust settlement receipts, the prior-year Rite Aid credit, and higher operating expense to support volume. Prescription Technology Solutions rose on higher demand for access solutions. Medical-Surgical Solutions rose on lower restructuring and business rationalization, offset by $25 million of separation charges and a weaker ambulatory care contribution. Corporate expenses, net rose on higher restructuring, the absence of prior-year equity-securities gains, $52 million of separation charges and Norway-related charges, partly offset by the prior-year U.K. pension charge and lower litigation charges.

## Current quarter — first quarter fiscal 2027 (ended June 30, 2026)

*From the Form 10-Q for the quarter ended June 30, 2026, accession 0000927653-26-000234, and the earnings release furnished as Exhibit 99.1 to the Form 8-K dated August 5, 2026, accession 0000927653-26-000232.*

Revenues were $105,380 million, up 8% from $97,827 million. Gross profit rose 12% and total operating expenses rose 5%, with operating expenses falling as a percentage of revenue. But **GAAP earnings fell**: net income attributable to McKesson was $614 million against $784 million, and diluted EPS $5.15 against $6.25, a decrease of $1.10. Management attributes the decline principally to a $293 million redemption-value adjustment on the redeemable noncontrolling interest created by the Medical-Surgical Solutions minority sale, plus a further $81 million redemption-value adjustment on the Core Ventures redeemable noncontrolling interest ($374 million in aggregate), partly offset by organic growth and by the absence of the prior-year $189 million Rite Aid bad-debt provision. On the company's adjusted basis, Adjusted Earnings per Diluted Share was $9.93 against $8.26, up 20%, and Adjusted Earnings $1,183 million against $1,037 million. The two directions of travel in the same quarter are the thing to understand here: the operating businesses grew, and non-cash remeasurements of redeemable minority interests took GAAP EPS down 18%.

Segment revenue for the quarter: North American Pharmaceutical $86.8 billion, up 5% (U.S. sales up $3.7 billion on institutional and retail national account volumes, offset by branded price decreases and branded-to-generic conversion); Oncology & Multispecialty $14.2 billion, up 33% or $3.6 billion on specialty pharmaceutical sales in provider solutions; Prescription Technology Solutions $1.6 billion, up 9% or $132 million on third-party logistics volumes; Medical-Surgical Solutions $2.8 billion, up 4% or $118 million (extended care up $79 million, ambulatory care up $35 million). Segment operating profit was $903 million, $325 million, $226 million and $122 million respectively; on the company's adjusted basis, $894 million (up 19%), $405 million (up 41%), $303 million (up 13%) and $195 million (down 20%, on product mix and one-time administrative expenses).

Operating profit direction by segment: North American Pharmaceutical up on volumes and the absent Rite Aid impact; Oncology & Multispecialty up on specialty growth including prior-year acquisitions; Prescription Technology Solutions **down** on higher restructuring charges and operating expense, partly offset by access-solutions demand; Medical-Surgical Solutions **down** on $45 million of separation charges, a weaker ambulatory care contribution and higher operating expense. Corporate expenses, net decreased, helped by a $34 million credit on the estimated opioid liability and offset by $23 million of separation charges and higher restructuring.

**Restructuring stepped up.** Restructuring, impairment and related charges were $136 million against $47 million. A new multi-year Corporate initiative approved in the first quarter of fiscal 2027 — organizational change, process enhancement and automation across enterprise support functions — anticipates approximately $230–310 million of total charges, substantially complete by the end of fiscal 2028, with only immaterial charges booked so far. The Prescription Technology Solutions program took $61 million in the quarter, mostly asset impairments plus severance. The fiscal 2025 enterprise-wide program took $45 million against $38 million.

**The Medical-Surgical separation advanced from agreement to execution.** On June 1, 2026 the Apollo Funds transaction closed: Apollo invested approximately $1.25 billion in convertible preferred equity for an approximately 13% minority interest in the Medical-Surgical Solutions business. McKesson retains operating control and majority ownership and continues to consolidate the segment, recognising a redeemable noncontrolling interest for the divested portion — the source of the $293 million remeasurement, the larger of the two behind the EPS decline. Financing was put in place alongside it: subsidiaries within the segment entered, and then amended, a syndicated credit agreement comprising a $750 million senior secured term loan due 2031, a $250 million senior secured term loan due 2028 and a $2.25 billion senior secured term loan due 2032 (established June 9, 2026), for total proceeds net of discounts and expenses of $3.2 billion, plus a $1.0 billion senior secured revolving credit facility maturing April 2031. The net proceeds were used for a payment of principal on an intercompany loan. Separately, on April 24, 2026 McKesson terminated its 2022 revolving credit facility and its 364-day facility and entered a new $5.0 billion senior unsecured credit facility maturing in 2031.

**Cash flow was negative in the quarter, as it often is in the first quarter.** Net cash used by operating activities improved by $698 million year on year; the release reports cash used in operations of $220 million and capital expenditure of $152 million, giving negative free cash flow of $372 million. Drivers: net income up $201 million, a $1.8 billion accounts-payable inflow on vendor payment scheduling partly offset by period-end timing, a $285 million receivables outflow, and $701 million of higher income tax payments. Investing used $214 million against $3.6 billion (the prior-year quarter carried $3.4 billion of acquisition payments for Core Ventures and PRISM Vision). Financing provided $1.6 billion against $1.2 billion: the $3.2 billion of Medical-Surgical term-loan proceeds and $1,238 million of net proceeds from the Apollo investment more than covered $2.5 billion of share repurchases and $102 million of dividends.

**Capital returns accelerated.** McKesson returned $2.6 billion in the quarter — $2.5 billion of repurchases and $102 million of dividends. The Board approved an additional $5.0 billion of repurchase authorization on April 29, 2026, leaving $5.2 billion outstanding at June 30, 2026. The March 2026 accelerated share repurchase program completed in May 2026 at 2.7 million total shares and an average price of $820.04 per share; a new $2.25 billion accelerated program was entered in May 2026 and settles in the second quarter of fiscal 2027. Weighted-average diluted shares fell to 119.2 million from 125.5 million. The income tax rate was 21.1% against 20.9%, on expense of $276 million against $220 million. Interest expense rose, driven by the Medical-Surgical credit agreement.

**Guidance.** McKesson raised its fiscal 2027 Adjusted Earnings per Diluted Share guidance range to $44.20 to $45.00, from a previous range of $43.80 to $44.60 — 13% to 15% growth over the prior year. The company does not provide forward-looking guidance on a GAAP basis, stating it cannot reasonably forecast LIFO adjustments, certain litigation loss and gain contingencies, transaction-related expenses, restructuring and impairment charges and other adjustments.

**Litigation position at June 30, 2026.** Total opioid litigation liabilities were $5,660 million against $5,692 million at March 31, 2026 ($602 million current, $5,058 million long-term). No settlement payments were made during the quarter. The core Settlement with 48 states, their participating subdivisions, the District of Columbia and all eligible territories carries $7.9 billion of payments to 2038, of which a minimum of 85% must fund opioid remediation; approximately 2,300 cases have been dismissed under it. Separate agreements cover Alabama and its subdivisions (approximately $174 million through 2031) and certain West Virginia subdivisions (approximately $152 million through 2033). Native American tribe settlements total $196 million through 2027. Class settlements were reached with acute care hospitals ($149 million, paid into escrow November 27, 2024) and third-party payors ($114 million, escrowed February 12, 2025). Two developments moved in opposite directions: on April 24, 2026 the Supreme Court of Maryland vacated the $37 million compensatory / $72 million abatement judgment entered against McKesson in the City of Baltimore case on September 4, 2025, Baltimore dismissed its claim with prejudice, and the company reduced its overall opioid accrual by $32 million; but on October 28, 2025 the Fourth Circuit reversed the 2022 trial judgment in McKesson's favour in the Cabell County and City of Huntington case and remanded for further proceedings. In Canada, four opioid cases are pending, with a common-issues trial for a class of provincial governments scheduled to begin February 22, 2028. In the A&P bankruptcy preference action, the court ruled on June 17, 2026 that a portion of the transfers were preferential, in an amount not material to the company.

The company reported no material changes to the risk factors disclosed in the fiscal 2026 Form 10-K.

## Subsequent events

*Events after June 30, 2026, from the Form 10-Q for the quarter ended June 30, 2026 (accession 0000927653-26-000234), the earnings release furnished as Exhibit 99.1 to the Form 8-K dated August 5, 2026 (accession 0000927653-26-000232), and the Form 8-K dated August 25, 2026 (accession 0000927653-26-000247).*

- **Opioid settlement payments of $496 million.** In July 2026 McKesson made payments totalling $496 million associated with the Settlement and the separate settlement agreements for opioid-related claims of participating states, subdivisions and Native American tribes. No such payments had been made during the June quarter itself.
- **Dividend raised 15%.** On July 21, 2026 the Board raised the quarterly dividend from $0.82 to $0.94 per share — the tenth consecutive year of increases.
- **Cross-currency swaps rolled.** The company's €500 million cross-currency fixed-to-fixed interest rate swaps matured in July 2026, and it executed new cross-currency swaps on similar terms maturing October 2026, to continue mitigating currency exposure on its foreign currency-denominated notes.
- **Annual meeting.** The Annual Meeting of Shareholders was held July 22, 2026; all eleven director nominees were elected.
- **Chief Strategy Officer transition.** Thomas L. Rodgers gave notice on June 29, 2026 of his intention to retire as Executive Vice President, Chief Strategy and Business Development Officer; his last day of employment was August 1, 2026. Ramesh Srinivasan was appointed Executive Vice President, Chief Strategy Officer effective August 1, 2026.
- **The separated business has a name.** On August 5, 2026 McKesson unveiled **Wellverse** as the name of the future standalone Medical-Surgical Solutions business.
- **Guidance raised.** On August 5, 2026 the company raised fiscal 2027 Adjusted Earnings per Diluted Share guidance to $44.20–$45.00 from $43.80–$44.60.
- **Cybersecurity incident.** On August 25, 2026 McKesson discovered a cybersecurity incident affecting its information systems. As of the Form 8-K filed August 28, 2026 the investigation was in its early stages, and the company had not determined that the incident is material or that it has had, or is reasonably likely to have, any material impact on the company, including its financial condition or results of operations.