McKesson's fiscal Q1 2027 (Apr–Jun 2026) revenue rose 8% to $105.4B and adjusted EPS 20% to $9.93 on specialty-drug volume, but GAAP EPS fell 18% to $5.15 on a $293M non-cash charge tied to Apollo's Med-Surg stake; FY27 guidance raised to $44.20–$45.00.
Revenue
$105.4B
+7.7% YoY
Net income
$614M
-21.7% YoY
Diluted EPS
$5.15
-17.6% YoY
Operating margin
1.3%
Revenue up 8% and adjusted EPS up 20%, but GAAP EPS fell 18% on a $293 million accounting charge tied to the Med-Surg spin-off
McKesson's fiscal year ends March 31. So this quarter, April–June 2026, is the company's first quarter of fiscal 2027. The results come from the 10-Q filed August 5, 2026.
The business itself had a strong quarter. Revenue rose 7.7% to $105.4 billion. Gross profit grew faster than revenue, up 12% to $3.69 billion. Operating income rose 27% to $1.32 billion. Pre-tax income was up 24%.
Yet net income attributable to McKesson shareholders fell 22% to $614 million, and diluted EPS dropped from $6.25 to $5.15. The whole gap sits below the pre-tax line, in "net income attributable to noncontrolling interests." That line is the share of profit belonging to outside part-owners of McKesson subsidiaries. It jumped from $47 million to $418 million. Of that, $374 million came from two non-cash accounting charges: $293 million tied to the new Apollo stake in the Medical-Surgical business, and $81 million for Core Ventures (see below). Excluding these and other items, McKesson's adjusted EPS rose 20% to $9.93. The company then raised its full-year guidance.
Key metrics
Metric
Q1 FY2027 (Apr–Jun 2026)
Q1 FY2026 (Apr–Jun 2025)
YoY Change
Revenue
$105,380M
$97,827M
+7.7%
Gross profit
$3,685M
$3,279M
+12.4%
Gross margin
3.50%
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The segment operating profit figure leaves out the prior year's $13 million from "Other," which is the Norway business sold in January 2026.
How to read these margins: McKesson is a drug wholesaler. It buys medicines from manufacturers and delivers them to pharmacies, hospitals and clinics, and almost all of the price passes straight through. Gross margin is the share of revenue left after the cost of the goods sold. Here it is 3.5 cents per dollar. Operating margin is what remains after also paying to run the business, before interest and tax. Here it is about 1.25 cents per dollar. At these margins, small gains in efficiency or product mix move profit a lot. The 15-basis-point improvement in gross margin (a basis point is 0.01 percentage point) accounts for roughly $160 million of extra gross profit on this revenue base.
Segment results
Segment
Revenue
Rev. YoY
Operating profit
Op. profit YoY
Op. margin (vs. prior year)
North American Pharmaceutical
$86,773M
+5%
$903M
+52%
1.04% (0.72%)
Oncology & Multispecialty
$14,222M
+33%
$325M
+53%
2.29% (1.99%)
Prescription Technology Solutions
$1,566M
+9%
$226M
−11%
14.43% (17.64%)
Medical-Surgical Solutions
$2,819M
+4%
$122M
−45%
4.33% (8.18%)
North American Pharmaceutical (U.S. and Canadian drug distribution, 82% of revenue). U.S. sales rose $3.7 billion. The 10-Q attributes this to "higher volumes from institutional and retail national account customers partially offset by branded pharmaceutical price decreases and branded to generic drug conversions." The 52% jump in operating profit overstates the underlying trend. Last year's quarter carried a $189 million bad-debt provision for the Rite Aid bankruptcy. Adding that back, prior-year profit would have been about $783 million, which makes this year's growth roughly 15%. On the company's adjusted basis, segment profit grew 19% to $894 million. The earnings release credits "growth in the distribution of specialty products to health systems and strategic accounts, and the timing of new product launches." Launch timing can shift profit between quarters, so part of that gain may not repeat.
Oncology & Multispecialty (specialty drugs for cancer and other specialist practices, plus practice-management services). This was the fastest-growing segment. It added $3.6 billion of revenue, nearly half of the company's total $7.6 billion increase. The 10-Q says revenue growth came from "higher specialty pharmaceutical sales in provider solutions." Operating profit rose 53%. The filing cites specialty growth "including contributions from business acquisitions completed in the prior year." These are Core Ventures (about $2.5 billion) and PRISM Vision ($874 million), both bought in the April–June 2025 quarter. They were therefore only partly in the comparison period, so this is not all organic growth.
Prescription Technology Solutions (software and services that help patients get and afford medicines, such as electronic prior authorization, plus third-party logistics for drugmakers). Revenue grew 9% on third-party logistics volumes. Operating profit fell 11%, mainly because of $61 million of restructuring charges, largely asset write-downs and severance under a program the company expects to cost $200–250 million in total. Without those charges, profit would have been about $287 million, up roughly 13%. The adjusted figure is similar: $303 million, +13%, from "higher demand for access solutions."
Medical-Surgical Solutions (supplies for doctors' offices, surgery centers, labs and nursing homes). This is the unit McKesson plans to spin off, and its future standalone name is Wellverse. It had the weakest quarter. Profit fell 45%, partly because of $45 million of separation costs. Even without those costs, profit would have been about $167 million, down around 24%. The 10-Q also points to "a decline in the contribution from our ambulatory care business" and higher operating costs. The release cites product mix and one-time administrative expenses. Adjusted segment profit fell 20% to $195 million. This decline is in the underlying business, not only an accounting effect, and it comes just as the unit is being prepared to stand alone.
Why GAAP EPS fell: the Apollo stake and the $293 million charge
On June 1, 2026, funds managed by Apollo paid about $1.25 billion for convertible preferred equity in the Medical-Surgical business, roughly a 13% stake. McKesson still controls the business and still reports all of its results. Apollo's stake, however, has redemption features "not solely within our control," such as put rights, meaning Apollo can require the stake to be bought back. Because of that, McKesson has to carry the stake at its redemption value and review it every quarter. When that value rises, the increase is charged against the profit belonging to McKesson shareholders.
This quarter the adjustment was $293 million, plus $81 million for the Core Ventures stake. Neither charge uses cash in the period. Both do reduce McKesson shareholders' reported share of earnings. McKesson removes them in its adjusted figures, where "transaction-related expenses and adjustments" came to $3.85 per share this quarter versus $0.58 a year ago. Further charges of this kind are possible while the Apollo stake is outstanding. Readers comparing GAAP EPS across quarters should keep this in mind.
Other items worth noting:
Restructuring charges tripled to $136 million from $47 million, spread across the PTS program, a legacy enterprise-wide program ($45 million) and a new Corporate program announced this quarter, which is expected to cost $230–310 million over time.
Opioid litigation produced a $34 million credit, a reduction in the estimated liability. This helped the quarter by that amount.
Interest expense rose 57% to $77 million. The 10-Q attributes this mainly to new Medical-Surgical-level debt: about $3.2 billion of secured term loans raised in June as part of the separation.
Share count fell 5% after $2.5 billion of buybacks this quarter, including a $2.25 billion accelerated repurchase. That alone lifts EPS by about 5% at constant earnings.
Norway: the sale closed in January 2026, which removed $305 million of revenue from the comparison. Excluding it, revenue growth was about 8.1%.
Takeaway: The 18% drop in GAAP EPS comes from accounting for the Med-Surg spin-off, not from weaker operations. The core distribution businesses grew profit faster than revenue: segment profit rose about 23% on 8% revenue growth. The real soft spot is Medical-Surgical itself. Its profit fell about 24% even before separation costs, just as it is being prepared to trade as a standalone company.
Cash flow and capital returns
Operating cash flow was −$220 million and free cash flow −$372 million, compared with −$918 million in operating cash flow a year earlier. The year-ago quarter was also a cash outflow; the 10-Q attributes these swings to the timing of payments to suppliers and collections from customers. This year's quarter also included $701 million more in income-tax payments. The company still returned $2.6 billion to shareholders ($2.5 billion in buybacks and $102 million in dividends). That was funded partly by the new Med-Surg term loans and the Apollo investment. On July 21 the Board raised the quarterly dividend 15% to $0.94 per share, and in April it added $5.0 billion to the buyback authorization, bringing the remaining total to $5.2 billion at quarter-end.
Outlook
Management raised fiscal 2027 adjusted EPS guidance to $44.20–$45.00, up from $43.80–$44.60, which implies 13–15% growth over fiscal 2026. The CFO said the increase "reflects strong first quarter performance." McKesson does not give GAAP EPS guidance. It says it cannot forecast items such as restructuring or transaction-related adjustments, and that includes the kind of redemption-value charge that hit this quarter.
Our read: Guidance went up by $0.40 at both ends of the range. That is small next to the first quarter's $1.67 year-over-year gain in adjusted EPS, and management tied the raise explicitly to first-quarter results. This suggests the outlook for the remaining three quarters is largely unchanged rather than improved. Reaching the range depends mostly on specialty-drug volume in the two largest segments continuing, and on the buyback shrinking the share count. Three things to watch in the fiscal Q2 report (July–September 2026, expected around early November):
Whether Medical-Surgical's underlying profit stabilizes before the Wellverse separation.
Whether North American Pharmaceutical's margin holds above 1%, or whether part of this quarter's gain was launch timing that reverses.
How large the next redemption-value adjustment on the Apollo stake is, since it can again push GAAP EPS well away from adjusted EPS.