AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 29/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · 2/4 · An operating distribution network, joint sourcing and integrated pharmacy tools support a substantial competitive platform. They plausibly create efficiencies and switching friction, but comparative costs, barriers to replication and customer migration burdens are undisclosed. Existing capabilities support a mixed assessment without establishing a durable moat.
durability · — · The passages establish current infrastructure and useful services but cannot establish how long any relative advantage persists. They lack comparative cost history, defensible exclusivity, switching outcomes or other evidence of sustained protection. Health Mart contraction qualifies franchise stability without resolving the durability of the broader business.
customer dependency · 2/4 · Ordering, inventory and reimbursement integration places McKesson within recurring pharmacy workflows. Increased prescription volumes provide indirect evidence of repeat demand. However, material replacement burdens are unquantified, and Health Mart participation declined. This supports mixed customer dependency rather than demonstrated lock-in or a measured retention rate.
erosion resilience · 2/4 · Specialty distribution and access-solutions adjusted profit growth demonstrate operating resilience, although acquisition contributions and launch timing affect attribution. Medical-Surgical adjusted profit declined, Health Mart contracted and sourcing difficulties are experienced. The combined record is mixed; growth does not establish immunity from competitive erosion.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · The disclosed practice is to pass published supplier price changes to customers. This establishes pricing transmission, but the passages do not identify actual customer price changes or realized net fees. Lower branded-pharmaceutical contributions combine unspecified drivers and cannot isolate pricing. Autonomous realized pricing therefore remains unassessable.
retention · 2/4 · Growing prescription transaction volumes and access-solutions demand support recurring usage through indirect operating evidence. Integrated pharmacy workflows add plausible friction. Against that, Health Mart declined from approximately 4,400 pharmacies in the 2025 filing to 3,900 in 2026. Neither growth nor these counts isolate contractual renewal or customer churn.
margin resilience · 2/4 · Manufacturer price protection limits inventory price losses, while pharmaceutical, oncology and access-solutions adjusted profit grew. Medical-Surgical adjusted profit fell 20%. Volume, acquisitions, product mix and launch timing influence these outcomes, so they support mixed earnings resilience rather than proving price-led margin expansion or company-wide margin stability.
contractual freedom · 1/4 · North American Pharmaceutical's disclosed practice links customer product pricing to suppliers' published changes, indicating limited independent product-price discretion. Manufacturer protection cushions inventory exposure without establishing freedom to set customer economics. Service-fee, repricing and termination provisions are missing, limiting the breadth of this weak assessment.
Predictability100
5 consecutive published annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 4.10
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.15
- observedAnnualPeriods
- 5.00
Financial strength75
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 97.98
- netDebtEbitGrade
- 91.79
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 8.29
- Debt / FCF (x)
- 1.14
- Net debt / operating income (x)
- 0.41
- Interest coverage (x)
- 25.15
- Current ratio (x)
- 0.85
Capital allocation86
Three-year equal-weight indicators: pretax operating return on average total assets (0–15%; alternative because at least one reported average invested-capital denominator is nonpositive; this is not ROIC), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -4.31
- 3-year average SBC / revenue (%)
- 0.06
- cashConversionGrade
- 100.00
- operatingAssetReturn
- 6.71
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · The June 2026 quarter combined operating cash use, substantial repurchases and debt issuance; disclosed working-capital seasonality limits adverse interpretation. Prior-year acquisition spending and the conditional $1.4 billion Option Care Health commitment show material deployment. Returns on those investments and repurchase value creation remain unestablished, supporting mixed discipline.
incentive alignment · 2/4 · Adopted FY 2024–FY 2026 PSUs use multiyear adjusted EPS, ROIC and relative shareholder returns. All NEOs met ownership requirements as of March 31, 2026. Restricted awards count toward ownership, and favorable change-in-control conversion weakens downside symmetry. Actual payout sensitivity is not demonstrated in the supplied passages.
execution · 3/4 · Prescription-volume growth and higher adjusted pharmaceutical, oncology and access-solutions profits demonstrate strong execution through operating evidence. Acquisitions and launch timing contribute. Medical-Surgical weakness, Health Mart contraction and the prior-year Rite Aid bad-debt provision qualify the record. These results do not isolate management's contribution from market demand.
governance · 2/4 · Annual elections, majority voting, proxy access, special-meeting rights and an independent leadership provision support accountability; actual advisory compensation approval is disclosed. Combined CEO-chair authority tempers independence. The $5.7 billion opioid settlement liability is a material legacy burden, although it does not by itself establish current oversight failure.
Evidence
Pharmaceutical
Our U.S. Pharmaceutical business operates and serves customers through a network of 27 distribution centers in the U.S., including two strategic redistribution centers.
2026 Form 10-K, filed May 8, 2026; Business, U.S. Pharmaceutical distribution network · Filed 08/05/2026
We also source generic pharmaceutical drugs through our ClarusONE Sourcing Services LLP joint venture with Walmart Inc.
2026 Form 10-K, filed May 8, 2026; Business, generic pharmaceutical sourcing · Filed 08/05/2026
•McKesson SynerGx® – Generic pharmaceutical purchasing program and inventory management that helps pharmacies maximize their cost savings with a broad selection of generic drugs, competitive pricing, and one-stop shopping.
2026 Form 10-K, filed May 8, 2026; Business, SynerGx purchasing program · Filed 08/05/2026
For example, we offer McKesson ConnectSM, an internet-based ordering system that provides item look-up and real-time inventory availability as well as ordering, purchasing, third-party reconciliation, and account management functionality.
2026 Form 10-K, filed May 8, 2026; Business, McKesson Connect · Filed 08/05/2026
•Inventory Management – An integrated solution comprised of forecasting software and automated replenishment technologies that reduce inventory-carrying costs.
2026 Form 10-K, filed May 8, 2026; Business, inventory management · Filed 08/05/2026
•McKesson Reimbursement AdvantageSM (“MRA”) – MRA is one of the industry’s most comprehensive reimbursement optimization packages, comprising financial services (automated claim resubmission), analytic services, and customer care.
2026 Form 10-K, filed May 8, 2026; Business, reimbursement optimization services · Filed 08/05/2026
From time to time, we experience difficulties and delays in sourcing and selling products due to a variety of causes that result in suppliers’ failure to satisfy production demand.
2026 Form 10-K, filed May 8, 2026; Risk Factors, experienced sourcing difficulties · Filed 08/05/2026
In these types of situations, our alternative sourcing efforts are not always fully successful.
2026 Form 10-K, filed May 8, 2026; Risk Factors, alternative sourcing outcomes · Filed 08/05/2026
•Revenues were $86.8 billion, an increase of 5%, driven by increased prescription transaction volumes, including higher volumes from specialty products, partially offset by lower contributions from branded pharmaceuticals.
Earnings release filed August 5, 2026; quarter ended June 30, 2026, North American Pharmaceutical revenue drivers · Filed 05/08/2026
Adjusted Segment Operating Profit was $894 million, an increase of 19%, driven by growth in the distribution of specialty products to health systems and strategic accounts, and the timing of new product launches.
Earnings release filed August 5, 2026; quarter ended June 30, 2026, North American Pharmaceutical adjusted operating profit · Filed 05/08/2026
•Revenues were $1.6 billion, an increase of 9%, driven by increased prescription volumes in third-party logistics and access solutions.
Earnings release filed August 5, 2026; quarter ended June 30, 2026, Prescription Technology Solutions revenue drivers · Filed 05/08/2026
•Health Mart® – A national network of approximately 3,900 independently-owned pharmacies and one of the industry’s most comprehensive pharmacy franchise programs.
2026 Form 10-K, filed May 8, 2026; Business, approximately 3,900 Health Mart pharmacies · Filed 08/05/2026
•Health Mart® – A national network of approximately 4,400 independently-owned pharmacies and one of the industry’s most comprehensive pharmacy franchise programs.
2025 Form 10-K, filed May 9, 2025; Business, approximately 4,400 Health Mart pharmacies · Filed 09/05/2025
The business’ practice is to pass on to customers published price changes from suppliers.
Form 10-Q filed February 4, 2026; MD&A, North American Pharmaceutical supplier-price pass-through practice · Filed 04/02/2026
Manufacturers generally provide us with price protection, which limits price related inventory losses.
Form 10-Q filed February 4, 2026; MD&A, manufacturer inventory price protection · Filed 04/02/2026
Adjusted Segment Operating Profit was $405 million, an increase of 41%, driven by growth in provider solutions and specialty distribution, including contributions from acquisitions.
Earnings release filed August 5, 2026; quarter ended June 30, 2026, Oncology & Multispecialty adjusted operating profit · Filed 05/08/2026
Adjusted Segment Operating Profit was $303 million, an increase of 13%, driven by higher demand for access solutions.
Earnings release filed August 5, 2026; quarter ended June 30, 2026, Prescription Technology Solutions adjusted operating profit · Filed 05/08/2026
Adjusted Segment Operating Profit was $195 million, a decrease of 20%, driven by product mix and one-time administrative expenses, partially offset by contributions from the extended care channel.
Earnings release filed August 5, 2026; quarter ended June 30, 2026, Medical-Surgical Solutions adjusted operating profit · Filed 05/08/2026
Receivables
(2,374)
(2,089)
Inventories
(2,074)
(1,971)
Drafts and accounts payable
3,773
1,947
Operating lease liabilities
(65)
(89)
Taxes
(538)
134
Litigation liabilities
(34)
—
Other
(380)
(165)
Net cash used in operating activities
(220)
(918)
INVESTING ACTIVITIES
Payments for property, plant, and equipment
(112)
(111)
Capitalized software expenditures
(40)
(78)
Acquisitions, net of cash, cash equivalents, and restricted cash acquired
(23)
(3,359)
Proceeds from sales of businesses and investments, net
9
4
Other
(48)
(20)
Net cash used in investing activities
(214)
(3,564)
FINANCING ACTIVITIES
Proceeds from issuances of long-term debt
3,215
1,990
Repayments of long-term debt
(1)
—
Common stock transactions:
Issuances
23
22
Share repurchases
(2,530)
(581)
Dividends paid
(102)
(90)
Sale of noncontrolling interest in Medical-Surgical Solutions, net
1,238
—
Other
(211)
(165)
Net cash provided by financing activities
1,632
1,176
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(10)
33
Net increase (decrease) in cash, cash equivalents, and restricted cash
1,188
(3,273)
Cash, cash equivalents, and restricted cash at beginning of period
4,068
5,956
Cash, cash equivalents, and restricted cash at end of period
5,256
2,683
Less: Restricted cash at end of period included in Prepaid expenses and other
(92)
(265)
Cash and cash equivalents at end of period
$
5,164
$
2,418
Schedule 6
McKESSON CORPORATION
RECONCILIATION OF GAAP CASH FLOW TO FREE CASH FLOW (NON-GAAP)
(unaudited)
(in millions)
Three Months Ended June 30,
2026
2025
Change
GAAP CASH FLOW CATEGORIES
Net cash used in operating activities
$
(220)
$
(918)
(76)
%
Net cash used in investing activities
(214)
(3,564)
(94)
Net cash provided by financing activities
1,632
1,176
39
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(10)
33
(130)
Net increase (decrease) in cash, cash equivalents, and restricted cash
$
1,188
$
(3,273)
136
%
FREE CASH FLOW (NON-GAAP)
Net cash used in operating activities
$
(220)
$
(918)
(76)
%
Payments for property, plant, and equipment
(112)
(111)
1
Capitalized software expenditures
(40)
(78)
(49)
Free Cash Flow (Non-GAAP)
$
(372)
$
(1,107)
(66)
%
Any percentage changes displayed above which are not meaningful are displayed as zero percent.
Earnings release filed August 5, 2026; cash-flow disclosures and reconciliation, three months ended June 30, 2026 and 2025, in millions · Filed 05/08/2026
Our businesses require substantial investments in working capital that are susceptible to large variations during the year as a result of inventory purchase patterns and seasonal demands.
Form 10-Q filed August 5, 2026; MD&A, working-capital seasonality · Filed 05/08/2026
Under the definitive agreement, CD&R will hold a majority interest of approximately 51% in Option Care Health and McKesson will invest approximately $1.4 billion for a minority interest of approximately 49%.
Transaction release filed October 6, 2026; proposed Option Care Health ownership and McKesson investment · Filed 06/10/2026
The transaction is expected to close in the first half of calendar year 2027, subject to customary closing conditions, including approval by Option Care Health’s stockholders and the receipt of required regulatory approvals.
Transaction release filed October 6, 2026; expected closing and transaction conditions · Filed 06/10/2026
Our FY 2024 – FY 2026 Performance Stock Unit (PSU) awards were based on three-year Cumulative Adjusted EPS, three-year average ROIC, and TSR performance relative to a comparator group of companies (rTSR).
Proxy statement filed June 12, 2026; FY 2024–FY 2026 PSU performance metrics · Filed 12/06/2026
Our CEO’s ownership requirement is six times base salary, and the ownership requirement for each of the Company’s other executive officers is three times their respective base salaries.
Proxy statement filed June 12, 2026; executive stock ownership requirements · Filed 12/06/2026
As of March 31, 2026, all NEOs satisfied their stock ownership requirement.
Proxy statement filed June 12, 2026; NEO ownership compliance as of March 31, 2026 · Filed 12/06/2026
•Shares of the Company’s common stock underlying outstanding restricted stock and restricted stock unit awards; and/or
Proxy statement filed June 12, 2026; restricted awards eligible toward ownership requirements · Filed 12/06/2026
The amounts shown for the Value of Stock Vesting in the event of “Involuntary Termination in Connection with a Change in Control” in column (e) include PSU awards converted to RSUs based on the greater of target and actual performance achieved.
Proxy statement filed June 12, 2026; potential change-in-control PSU conversion · Filed 12/06/2026
Shareholder Rights
Board of Directors
Corporate Governance
•Annual election of directors with majority voting standard for uncontested elections
•Proxy access
•Meaningful right to call special meeting of shareholders (15% ownership threshold)
•No supermajority vote provisions
•Lead Independent Director with robust roles and responsibilities
Proxy statement filed June 12, 2026; shareholder rights and independent leadership provisions · Filed 12/06/2026
Brian S. Tyler, who has served as McKesson’s Chief Executive Officer since 2019 and has led the Company’s transformation into a diversified healthcare services leader, assumed the additional role of Chair of the Board, effective May 1, 2026.
Proxy statement filed June 12, 2026; combined CEO and chair role effective May 1, 2026 · Filed 12/06/2026
The proposal to approve, on an advisory basis, the compensation of the Company’s named executive officers was approved, having received the following votes:3
Votes For
Votes Against
Abstentions
Broker Non-Votes
86,580,776
7,732,776
387,199
10,458,484
1
A nominee will be elected as a director if he or she receives a majority of votes cast (that is, the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee).
Form 8-K filed July 24, 2026; actual annual-meeting advisory compensation vote · Filed 24/07/2026
Funds necessary for future debt maturities and our other cash requirements, including any future payments that may be made related to our total estimated litigation liability of $5.7 billion as of June 30, 2026 payable under the terms of various settlement agreements for opioid-related claims, are expected to be met by existing cash balances, cash flow from operations, existing credit sources, and future borrowings.
Form 10-Q filed August 5, 2026; estimated opioid settlement litigation liability as of June 30, 2026 · Filed 05/08/2026
5.Other adjustments, net for the three months ended June 30, 2025 includes a pre-tax provision for bad debts of $189 million ($140 million after-tax), within North American Pharmaceutical related to the bankruptcy of our customer, Rite Aid Corporation (including certain of its subsidiaries, "Rite Aid").
Earnings release filed August 5, 2026; prior-year quarter's Rite Aid bad-debt provision and non-GAAP treatment · Filed 05/08/2026
