stockrowWhat it does
McKesson is a healthcare services company that gets medicines and medical supplies from manufacturers to pharmacies, hospitals, physician practices and other customers. It also provides technology, logistics and services that help healthcare businesses manage operations and help patients access their medications.
Its North American pharmaceutical business distributes branded, generic, specialty, biosimilar and over-the-counter drugs in the United States and Canada. Beyond delivery, it sells pharmacies and health systems services such as inventory management, pharmacy software and consulting.
The Oncology & Multispecialty business distributes specialty drugs and supports community-based medical practices with services including purchasing, practice management and clinical research. It supports the U.S. Oncology Network of physician-led cancer practices. Prescription Technology Solutions connects participants across healthcare to help patients obtain and afford medicines, including through electronic prior authorization and prescription price information.
Medical-Surgical Solutions distributes products such as gloves, syringes and laboratory equipment to settings including physician offices, surgery centers and home health agencies. McKesson intends to separate this business into an independent company.
McKesson traces its business roots to 1833 and is headquartered in Irving. Brian S. Tyler is its chief executive officer.
How it makes money
McKesson earns revenue by distributing drugs and supplies and providing related services and technology. In fiscal 2026, North American Pharmaceutical generated $336.7 billion in revenue, or 83.7% of company revenue. In the second quarter of fiscal 2027, company revenue was $111 billion.
The pharmaceutical segment distributes medicines to retail chains, community pharmacies and institutional providers. It also sells financial, operational and clinical solutions. Some manufacturer distribution arrangements pay McKesson consideration based on a percentage of purchases; others include an inflation-based component that can benefit the company when it sells existing inventory after a manufacturer raises prices.
Oncology & Multispecialty generated $48.4 billion in fiscal 2026 revenue. Its activities include specialty drug distribution, group purchasing, infusion services, practice consulting and technology. It also provides research and data services to providers and biopharma partners. McKesson completed its acquisition of Precision Medicine Group for approximately $2.25 billion; the business will be reported in this segment.
Prescription Technology Solutions generated $5.8 billion in fiscal 2026 revenue. It provides services including electronic prior authorization, patient enrollment, dispensing support and third-party logistics. Its access and affordability programs serve biopharma partners across a product’s life cycle, with support needs changing as a therapy moves from launch to maturity.
Medical-Surgical Solutions generated $11.5 billion in fiscal 2026 revenue by distributing supplies and equipment and providing logistics and other services. McKesson has announced plans to separate the business, and Apollo Funds has completed a minority investment in it.
| Segment | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| North American Pharmaceutical | $336.7 billion | 83.7% | 10.6% |
| Oncology & Multispecialty | $48.4 billion | 12.0% | 31.4% |
| Medical-Surgical Solutions | $11.5 billion | 2.86% | 1.12% |
| Prescription Technology Solutions | $5.8 billion | 1.44% | 11.3% |
Customers and how it sells
McKesson serves customers across the pharmaceutical supply chain, including retail pharmacy chains, independent pharmacies, hospitals, health systems, physicians, manufacturers and government entities. In medical-surgical distribution, customers also include surgery centers, nursing homes, hospice and home health agencies, and online retailers.
Sales are concentrated among a relatively small group of customers. In fiscal 2026, the ten largest customers accounted for 73.0% of consolidated revenue. CVS Health was the largest at 24.0%; the second-largest customer accounted for 11.0% of consolidated revenue, and the third-largest accounted for 10.0%. McKesson renewed its pharmaceutical distribution contract with CVS through June 2032.
The company also sells through agreements with group purchasing organizations, which act as purchasing agents for member hospitals, pharmacies and other providers. Its pharmaceutical operations serve the United States and Canada, while Medical-Surgical Solutions serves U.S. non-acute care settings. The U.S. pharmaceutical business operates through a network of 27 distribution centers, and its Canadian wholesale business has a national distribution network.
McKesson sold its Norway business in fiscal 2026. It was reported on 9 October 2026 that the company had also completed the sale of its Canadian retail businesses.
| Segment | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| North American Pharmaceutical | $336.7 billion | 83.7% | 10.6% |
| Oncology & Multispecialty | $48.4 billion | 12.0% | 31.4% |
| Medical-Surgical Solutions | $11.5 billion | 2.86% | 1.12% |
| Prescription Technology Solutions | $5.8 billion | 1.44% | 11.3% |
Suppliers and costs
McKesson obtains pharmaceuticals and other products from manufacturers. Its largest supplier accounted for 11% of total purchases in fiscal 2026, and its ten largest suppliers accounted for approximately 71%. The loss of a supplier could affect the business if alternative sources are unavailable. McKesson also sources generic drugs through ClarusONE, a joint venture with Walmart.
The company distributes national-brand medical-surgical products and products under its own brand. It invests in distribution centers, automation, technology and regulatory compliance. Its businesses also require substantial working capital for items such as inventories and receivables, with needs varying during the year as purchasing patterns and seasonal demand change.
Some manufacturer agreements give McKesson a benefit when it sells existing inventory after a price increase. Less frequent or smaller increases, or restrictions on available inventory, could adversely affect gross profit margin. McKesson also incurs costs to comply with controlled-substance monitoring, product-tracking and other regulatory requirements.
- Revenue$403.4B
- Cost of revenue−$388.9B
- Selling, general and administrative−$8.1B
- Operating income$6.2B
Competitive position
Cencora and Cardinal Health are McKesson’s primary competitors in pharmaceutical distribution, wholesaling and logistics. Both also offer combinations of distribution, group purchasing and provider services that compete with Oncology & Multispecialty. Other competitors include regional and specialty distributors, manufacturers that distribute directly, and customers that operate their own supply systems.
In oncology and specialty care, McKesson also competes with specialty pharmacies, physician networks, practice-management providers and healthcare technology and analytics companies. Its clinical research offerings compete with research organizations, academic medical centers and health systems. Prescription Technology Solutions competes with biopharma service providers, software firms, consultants and internet-based healthcare technology companies. Medical-Surgical Solutions competes with national and regional supply distributors.
McKesson considers its scale and the breadth of its products and services competitive advantages. Its U.S. pharmaceutical network has 27 distribution centers, while Prescription Technology Solutions connects with pharmacies, providers, health plans and other participants. Competitive factors include price, service quality, product assortment, innovation and convenience.
Our reading: The distribution network and breadth of services provide a meaningful competitive position, although other large distributors offer overlapping capabilities. Our reading: Prescription technology connections may help embed McKesson in customer workflows, but the business faces competition from a range of specialized providers.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Cencora, Inc. | Drug distribution, logistics and specialty provider services | High |
| Cardinal Health, Inc. | Drug distribution, logistics and specialty provider services | High |
Growth opportunities
McKesson is investing in its North American distribution network and in oncology, multispecialty and biopharma services. Its distribution investments include capacity, automation and technology. In the second quarter of fiscal 2027, North American Pharmaceutical revenue grew 6%, supported by higher prescription volumes, including specialty products and GLP-1 medications.
The company is expanding specialty services through practice support, research and acquisitions. Precision Medicine Group adds clinical research expertise in oncology, rare diseases, and cell and gene therapies, as well as market-access and commercialization services. It will be reported in Oncology & Multispecialty. McKesson has also agreed to invest approximately $1.4 billion for a 49% minority interest in Option Care Health, subject to shareholder and regulatory approvals. McKesson expects the transaction to close in the first half of calendar year 27.
In biopharma services, McKesson added 67 new programs across 58 unique brands during the second quarter of fiscal 2027 and recently introduced medical prior authorization capabilities. It continues to invest in automation and technology for access and affordability services.
McKesson expects fiscal 2027 revenue growth of 6 to 10% and operating profit growth of 12 to 16%. It expects continued demand for access and affordability solutions across GLP-1 medicines and other therapeutic categories.
- $264.0BFY2022
- $276.7BFY2023
- $309.0BFY2024
- $359.1BFY2025
- $403.4BFY2026
Structural risks
- Customer concentration: CVS accounted for 24.0% of fiscal 2026 consolidated revenue, while the ten largest customers accounted for 73.0%. McKesson has renewed its distribution contract with CVS through June 2032.
- Regulation and drug pricing: Changes to drug pricing, reimbursement and healthcare programs could affect customers and distribution economics. McKesson does not know how customers will respond to potential changes to the 340B program or whether prescriptions will move between channels.
- Litigation and controlled substances: McKesson experiences costly and disruptive legal disputes and faces extensive controlled-substance requirements. Its estimated litigation liability for opioid-related claims was $5.7 billion as of March 31, 2026, payable under settlement agreements.
- Supply and pricing: Disruptions or changes in product supply can affect sourcing and sales. Smaller or less frequent manufacturer price increases, or inventory restrictions, could adversely affect gross profit margin.
- Cybersecurity and data: Cybersecurity incidents could compromise technology systems or result in material data breaches. Privacy and data protection requirements also vary across jurisdictions and add compliance costs.
- Transactions and separation: Divestitures can be delayed or encounter difficulties. The planned Medical-Surgical separation and the proposed Option Care Health investment involve execution or approval requirements.
Bottom line
Our reading
McKesson combines a drug distribution business with specialty-care, research and prescription technology services. Our reading: Its distribution network and customer relationships support its position, but the concentration of revenue among a few customers leaves it exposed to individual contracts. Specialty and technology services offer additional areas for growth, while regulation, supply disruption and transaction execution remain important risks.