How Does McKesson Company Work?

McKesson's primary function is the large-scale distribution of pharmaceuticals. They manage the complex logistics of getting medications from manufacturers to various healthcare providers efficiently.

The company offers a robust logistics network, simplifying the supply chain for over 1,300 drug manufacturers. This consolidation reduces the need for direct deliveries to more than 180,000 dispensing points.

McKesson also provides critical healthcare technology solutions and consulting services. These offerings aim to enhance pharmacy operations and patient care management, supporting the entire healthcare ecosystem.

By taking legal ownership of products, McKesson absorbs inventory and credit risks for healthcare entities. This allows customers to benefit from reduced costs and improved service levels.

In fiscal year 2025, McKesson bolstered its specialized healthcare offerings through significant acquisitions. The company acquired an 80% controlling interest in PRISM Vision Holdings for $850 million in February 2025, enhancing its retinal and ophthalmology services. Additionally, the acquisition of a controlling interest (approximately 70% for $2.49 billion) in Core Ventures, an administrative services organization for Florida Cancer Specialists & Research Institute, was completed in June 2025, strengthening its community oncology platform.

McKesson divested its Canada-based retail pharmacy businesses, Rexall and Well.ca, in December 2024 to concentrate resources on high-growth areas. The company has consistently prioritized shareholder returns, approving its eighth consecutive annual dividend increase in August 2024 by 15% to $0.71 per share, followed by another increase to $0.82 per share in July 2025. A $4.0 billion increase to its share repurchase program was authorized in July 2024, bringing the total authorization to $9.9 billion.

McKesson's competitive edge is significantly derived from its vast distribution network, delivering over 40 million pharmaceutical and medical supply items annually across North America with 99% order accuracy. This robust McKesson supply chain ensures efficient delivery, underpinning how McKesson operates.

As one of three major US drug wholesalers, McKesson benefits from economies of scale, collectively supplying over 90% of the market. The company's technological leadership, including advanced pharmacy automation and access to research data from over 2.4 million patient records, provides a distinct advantage. McKesson's commitment to digital transformation and expansion of its oncology and biopharma platforms ensures its McKesson business model remains resilient against market shifts.

McKesson is one of the top three pharmaceutical wholesalers in the U.S., alongside two other major players, collectively controlling over 90% of the domestic drug distribution market. This strong market share is built on a foundation of extensive logistics and long-standing partnerships.

The company faces risks from regulatory changes, litigation concerning controlled substance distribution, intense competition, cybersecurity threats, and potential supply chain disruptions. Economic factors like inflation also present challenges.

McKesson is strategically separating its Medical-Surgical Solutions segment to sharpen focus and enhance shareholder value. Investments in oncology and biopharma platforms, including recent acquisitions, are also key priorities.

The company aims for $10 billion in adjusted operating profit by fiscal year 2027. For fiscal year 2025, adjusted earnings per diluted share guidance was raised to $31.75-$32.55, with fiscal year 2026 guidance set at $36.75-$37.55.