On May 7, 2024, McKesson Corp (MCK, Financial) disclosed its financial outcomes for the fiscal year 2024 through an 8-K filing. The company, a dominant force in the U.S. pharmaceutical wholesale industry, reported significant revenue growth coupled with a decline in adjusted earnings per share (EPS).
Company Overview
McKesson Corp, alongside Cencora and Cardinal Health, controls over 90% of the U.S. pharmaceutical wholesale market. The company's operations extend beyond the U.S., including significant activities in pharmaceutical wholesale and distribution in Canada. McKesson also supplies medical-surgical products and offers a range of technology solutions for pharmacies.
Fiscal Year 2024 Performance Highlights
For the fiscal year ended March 31, 2024, McKesson reported a robust 12% increase in consolidated revenues, reaching $309.0 billion. This growth was primarily driven by the U.S. Pharmaceutical segment, benefiting from higher prescription volumes and an expanded range of specialty products. Despite the revenue upsurge, the company witnessed a decrease in earnings per diluted share from continuing operations, which fell by $2.66 to $22.39. Adjusted EPS also saw a rise of 6% to $27.44, reflecting a mixed financial performance influenced by various strategic and operational adjustments.
Quarterly Financials and Adjustments
The fourth quarter showed a similar trend, with revenues climbing 11% to $76.4 billion compared to the previous year. The growth in this quarter was attributed to increased volumes in prescription and specialty products. However, the adjusted EPS for the quarter marked a 14% decrease to $6.18, impacted by a higher tax rate and other financial adjustments.
Strategic Initiatives and Operational Highlights
Throughout the fiscal year, McKesson continued to enhance its core operations and expand its strategic platforms, particularly in oncology and biopharma services. Notable achievements include advancements in the CoverMyMeds platform and a new collaboration through the Sarah Cannon Research Institute, which is expected to enhance clinical trial delivery in oncology.
The company also focused on health equity, launching initiatives to improve pharmacy access in underserved communities, starting with a pilot in Avondale, Ohio. Recognition for its workplace environment and innovation further underscored McKesson's operational strengths and commitment to corporate social responsibility.
Financial Outlook and Investor Considerations
Looking ahead to fiscal 2025, McKesson projects an adjusted EPS in the range of $31.25 to $32.05, indicating an optimistic growth forecast of 14% to 17%. This outlook reflects the company's confidence in its operational capabilities and strategic initiatives aimed at long-term value creation.
From an investment perspective, McKesson's significant free cash flow generation, robust shareholder returns, and strategic positioning within the pharmaceutical distribution and technology sectors make it a noteworthy candidate for portfolio consideration. However, investors should also weigh the challenges reflected in the adjusted EPS declines and the broader industry dynamics when making investment decisions.
Conclusion
McKesson's fiscal 2024 performance presents a complex yet promising picture, marked by revenue growth and strategic advancements against a backdrop of earnings adjustments. As the company continues to navigate the evolving healthcare landscape, its strategic focus and operational adjustments will be critical in sustaining growth and profitability.
Explore the complete 8-K earnings release (here) from McKesson Corp for further details.
