McKesson Corporation (MCK) is a diversified healthcare services leader dedicated to advancing health outcomes for patients everywhere. The company partners with biopharma companies, care providers, pharmacies, manufacturers, governments, and others to deliver insights, products, and services that make quality care more accessible and affordable.

Financials

In fiscal year 2024, McKesson reported impressive financial results, with annual revenue reaching $308.95 billion and annual net income of $3.002 billion. The company's annual operating cash flow was $4.314 billion, and its annual free cash flow was $3.627 billion. These strong financial metrics demonstrate McKesson's ability to consistently execute its strategies and create value for its stakeholders.

Business Overview

McKesson operates in four reportable segments:

1. U.S. Pharmaceutical:

Distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs, and provides practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices.

2. Prescription Technology Solutions (RxTS):

Helps solve medication access, affordability, and adherence challenges for patients by working across healthcare to connect patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies.

3. Medical-Surgical Solutions:

Provides medical-surgical supply distribution, logistics, and other services to healthcare providers, including physician offices, surgery centers, nursing homes, hospital reference labs, and home health care agencies.

4. International:

Includes the company's operations in Canada and Europe, bringing together non-U.S.-based drug distribution services, specialty pharmacy, retail, and infusion care services.

Recent Developments

In the fourth quarter of fiscal 2024, McKesson reported revenues of $76.36 billion, representing a year-over-year increase of 10.8%. Earnings per diluted share for the quarter were $6.18, compared to $7.19 in the prior-year period. The company's U.S. Pharmaceutical segment saw a 12% increase in revenues, driven by higher prescription volumes, including growth in specialty products, retail national account customers, and GLP-1 medications. The RxTS segment reported a 7% increase in revenues, reflecting organic growth across its solutions and services. The Medical-Surgical Solutions segment experienced a 6% revenue increase, driven by growth in the primary care and extended care businesses, partially offset by lower contributions from the kitting and distribution of ancillary supplies for the U.S. Government's COVID-19 program. The International segment reported a 6% revenue increase, primarily due to higher pharmaceutical distribution volumes in the Canadian business.

Outlook

Looking ahead to fiscal 2025, McKesson provided a positive outlook. The company anticipates U.S. Pharmaceutical revenues to increase 16% to 19% and operating profit to increase 8% to 10%, driven by sustainable momentum in the core distribution business and growth across the oncology platform. In the RxTS segment, the company expects revenues to increase 18% to 22% and operating profit to increase 12% to 16%, reflecting organic growth across its solutions and services. The Medical-Surgical Solutions segment is expected to see revenues increase 4% to 8% and operating profit increase 6% to 8%, leveraging the breadth and depth of its services and assets across all alternate sites of care. The International segment is anticipated to see revenues increase 4% to 8% and operating profit increase 6% to 10%, supported by the diversified set of assets within the Canadian business.

Liquidity

McKesson's strong financial position and consistent operating execution have enabled the company to return significant capital to shareholders. During fiscal 2024, the company repurchased $3 billion of its common stock and paid $314 million in dividends, returning approximately 92% of its free cash flow to shareholders. The company's balance sheet remains robust, with $4.6 billion in cash and cash equivalents as of the end of the fiscal fourth quarter.

Strategic Focus

The company's strategic focus on oncology and biopharma services has been a key driver of its growth. McKesson's US Oncology Network has expanded to approximately 2,600 providers at 600 sites of care across 31 states, treating over 1.4 million patients annually. The company's biopharma services platform, including its RxTS segment, has helped patients save more than $8.8 billion on brand and specialty medications, prevented approximately 10.7 million prescriptions from being abandoned due to affordability challenges, and helped patients access their medicine more than 94 million times.

Investments and Innovation

McKesson has also made strategic investments to drive innovation and enhance its capabilities. The company recently acquired Compile, a healthcare data platform that captures and aggregates data to provide insights and analytics for biopharma, which it plans to leverage across its Medical-Surgical Solutions segment. Additionally, McKesson is accelerating its investments in artificial intelligence, leveraging AI to increase efficiency across its operations and improve customer service and provider productivity.

Conclusion

The company's diversified business model, strong financial position, and strategic investments position McKesson well for continued growth and value creation. As the company executes on its strategies and priorities, investors can expect to see sustained financial performance and attractive shareholder returns.