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McKesson Exceeds EPS, Q3 Profit Surges
MCKMcKesson(MCK) The Motley Fool·2025-02-05 22:33

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,surpassingtheprojected8.03, surpassing the projected 8.01, while revenue was 95.3billion,belowtheestimated95.3 billion, below the estimated 96 billion [1][3] Financial Performance - Operating profit surged by 91% year-over-year, reaching 1.29billion,drivenbyenhancedefficiencyandcostcontrols[2][6]−RevenuefortheU.S.Pharmaceuticalsegmentwas1.29 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 1.4billion,attributedtogrowthinthird−partylogisticsandtechnologyservices[7]−TheMedical−SurgicalSolutionssegmentexperienceda31.4 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 879million[3]BusinessOverview−McKessonisakeyplayerinthehealthcaresupplychain,focusingonthedistributionofmedicalsuppliesandpharmaceuticalproducts[4]−ThecompanyhasbeenconsolidatingitsoperationsbyexitingsomeEuropeanmarketstostrengthenitscorebusinessintheU.S.andCanada[5]StrategicDevelopments−McKessonsecuredacontrollinginterestinPRISMVisionHoldings,expandingitsspecialtycareofferings[9]−ThecompanydivesteditsCanadianretailbusinesses,includingRexall,tofocusoncoregrowthmarkets[9]−Despitestrategicefforts,McKessonreportednegativefreecashflowof879 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 32.55to32.55 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]